CMCA CMCA - Certified Manager of Community Associations Budgeting and Reserve Studies Questions and Answers 3

Question 1

A reserve study conducted by an outside professional that includes a site visit and component analysis is classified as a:

Accepted Answer

Level I Full update with site visit

Answer

A Level I Full reserve study is the most comprehensive, involving an on-site inspection of all reserve components, quantity and condition verification, and a complete financial analysis.

Question 2

Which financial statement best shows an association's reserve fund balance at a specific point in time?

Accepted Answer

Balance sheet or statement of financial position

Answer

The balance sheet shows assets, liabilities, and fund balances at a specific date, including the reserve fund balance as a restricted asset or fund.

Question 3

A manager notices that the reserve study lists a component's remaining useful life as zero but the component has not been replaced. The best immediate action is to:

Accepted Answer

Notify the board so it can inspect the component and decide whether to replace or extend its life

Answer

When a component reaches the end of its projected useful life, the board should inspect it and make an informed decision to replace it, refurbish it, or extend its life with a revised estimate.

Question 4

In an association budget, contingency funds are best described as:

Accepted Answer

A line item covering unexpected operating expenses within the fiscal year

Answer

A contingency line in the operating budget provides a buffer for unforeseen operating expenses during the year, preventing the need for emergency board action every time an unexpected cost arises.

Question 5

When reviewing a proposed annual budget, the board should compare it against:

Accepted Answer

The previous year's actual expenses and current year-to-date actuals

Answer

Comparing the proposed budget to prior-year actuals and current year-to-date spending helps the board identify trends, catch errors, and ensure the new budget reflects realistic cost projections.

CMCA - Certified Manager of Community Associations Practice Test

CMCA - Certified Manager of Community Associations Practice Test

CMCA CMCA - Certified Manager of Community Associations Budgeting and Reserve Studies Questions and Answers 3