CMCA UPDATED 2026 EXAM QUESTIONS AND SOLUTIONS
GRADED A+
✔✔Reserve Cash Flow Statement - ✔✔Shows the amount to be funded and the
amount to be expended from the replacement fund over a given period of time.
✔✔Maintenance Fee - ✔✔Sometimes called an assessment, is the owner's financial
obligation to the community association during a given period of time - usually one year.
✔✔Authority to Collect Assessments - ✔✔Federal laws and regulations (the federal fair
debt collection practices act and soldiers and sailors civil relief act), state statutes, and
governing documents.
✔✔A formal collection policy is the foundation of a successful program for: -
✔✔Maintaining necessary cash flows, and reducing financial loss from owner defaults
on assessment payments.
✔✔Benefits of Having an Established Collection Policy - ✔✔Educates owners about
their obligations to the community association and the consequences of not meeting
those obligations on time, provides a checklist and a road map to guide a board and
manager, avoids charge that the association is proceeding in a selective or
discriminatory way, and helps preserve harmony among owners.
✔✔Characteristics of an Effective Collection Policy - ✔✔Be established by a proper
formal resolution of the board, specify only actions that are within the power of the
community association and its board, set a firm due date for assessments, outline the
steps to be taken by the person(s) responsible for collecting assessments when
payment is late, allow for direction in special cases, specify when a delinquent
assessment should be referred to legal counsel an provide for the collection of any
costs associated with collecting delinquent assessments.
✔✔Acceleration - ✔✔Is the collection of all assessments due through the end of the
fiscal year.
✔✔Extra Judicial (nonjudicial) Remedies - ✔✔Late charge or interest penalty, require
security deposit equal to certain number of months assessments, acceleration, suspend
owner's user privileges, and suspend owner's voting and other participation rights.
✔✔Judicial Remedies - ✔✔Record the association lien for public notice, foreclose the
lien, and personal money judgement (allows association to claim/collect rent from the
owner's tenant).
✔✔Foreclosure - ✔✔Is a legal proceeding filed in court whereby a party with a claim
against an owner can claim ownership of the unit involved in order to recover the money
it is owed.
,✔✔Personal Money Judgement - ✔✔Summary Judgement is a decision by a judge to
allow the community association to claim the owner's personal property to settle a
delinquent account.
✔✔Bankruptcy Declared - ✔✔Immediately contact legal counsel when you become
aware of a bankruptcy filing by an owner, immediately forward any bankruptcy notices
to your legal counsel, and immediately stop all collection efforts.
✔✔Types of Bankruptices - ✔✔Chapter 7, Chapter 11, and Chapter 13.
✔✔Chapter 7 - ✔✔Is called straight bankruptcy or liquidation. It involves the prompt
conversion of all individual's or corporation's non-exempt property to cash, and payment
of creditors to the extend possible.
✔✔Chapter 11 - ✔✔Is called a re-organization because it is designed to allow for an
orderly payment to creditors while enabling a corporation to continue to operate. Once a
judge approves a plan as "fair and equitable", it is binding and discharges all debts not
provided for under the plan.
✔✔Chapter 13 - ✔✔Is used to reorganize personal or non-corporate debt. A plan is
submitted to a judge for paying off all or some of the debt over a specified period of time
while waiving other debt that may have been incurred prior to filing for bankruptcy.
✔✔Bad Debt Write-Off - ✔✔Consists of recording an uncollectible debt as an expense
that the association must absorb.
✔✔Cash Basis - ✔✔This method records revenue when it is collected and expenses
when they are paid.
✔✔Accrual Basis - ✔✔This method records revenue when it is earned (or assessed to
owners) and expenses when they are incurred.
✔✔Modified Cash Basis - ✔✔This method records revenue on the accrual basis and
expenses on a cash basis with selected items reported on an accrual basis.
✔✔Statement of Revenue and Expense - ✔✔Records the community association's
financial transactions during a given period of time - generally for a given month plus the
fiscal year to date.
✔✔Three major components of a statement of revenue and expense - ✔✔Revenue,
Expense, and Excess Revenue Over Expense
, ✔✔Loss - ✔✔Occurs when expenses are greater than the income. Is indicated on a
statement of revenue and expense by putting the figure in parentheses.
✔✔Balance Sheet - ✔✔Is a summary of a community's financial position at a specific
point in time.
✔✔A balance sheet summarizes: - ✔✔What your community association owns, what
your community association owes, and the "net worth" of the association.
✔✔Three major components of a balance sheet - ✔✔Assets, Liabilities, and Members
equity or fund balance.
✔✔Deficit in member's equity - ✔✔When a community association's liabilities exceed its
assets. It occurs when a community association has incurred expenses that it cannot
pay until it collects future assessments from owners or sells assets.
✔✔Assets = Liabilities + Member's Equity - ✔✔Assets - Liabilities = Member's Equity
✔✔Warning Signs to Watch for When Reviewing Reports - ✔✔A steady decline in the
amount of cash on hand, the inability or failure to set aside budgeted additions to
replacement reserves, an increase in the amount of community association owes for
bills, the failure to reconcile bank statements monthly, significant and/or unexplained
differences between actual and budgeted figures for items, and unpaid amounts
showing as due between funds (such as the operating fund owes the money to the
reserve fund because the association had to use reserve funds to pay operating bills).
✔✔GAAP - ✔✔Accounting standards are called Generally Accepted Accounting
Principles. Their purpose is to provide uniformity among reports from different
preparers.
✔✔Independent Certified Public Accountant (CPA) - ✔✔Should not be a community
association employee or owner. Is certified by a state examine board as having fulfilled
the requirements of state law.
✔✔Engagement Letter - ✔✔Legally binding that describes nature of the work to be
done, type of report to be prepared, fee for services, time frame for the assignment, and
accountant's disclaimers.
✔✔Representation Letter - ✔✔States that the information of the community association
provides is true to the best of its knowledge, and describes the steps the community
association has taken to provide for the preparation of accurate and complete financial
statements.
GRADED A+
✔✔Reserve Cash Flow Statement - ✔✔Shows the amount to be funded and the
amount to be expended from the replacement fund over a given period of time.
✔✔Maintenance Fee - ✔✔Sometimes called an assessment, is the owner's financial
obligation to the community association during a given period of time - usually one year.
✔✔Authority to Collect Assessments - ✔✔Federal laws and regulations (the federal fair
debt collection practices act and soldiers and sailors civil relief act), state statutes, and
governing documents.
✔✔A formal collection policy is the foundation of a successful program for: -
✔✔Maintaining necessary cash flows, and reducing financial loss from owner defaults
on assessment payments.
✔✔Benefits of Having an Established Collection Policy - ✔✔Educates owners about
their obligations to the community association and the consequences of not meeting
those obligations on time, provides a checklist and a road map to guide a board and
manager, avoids charge that the association is proceeding in a selective or
discriminatory way, and helps preserve harmony among owners.
✔✔Characteristics of an Effective Collection Policy - ✔✔Be established by a proper
formal resolution of the board, specify only actions that are within the power of the
community association and its board, set a firm due date for assessments, outline the
steps to be taken by the person(s) responsible for collecting assessments when
payment is late, allow for direction in special cases, specify when a delinquent
assessment should be referred to legal counsel an provide for the collection of any
costs associated with collecting delinquent assessments.
✔✔Acceleration - ✔✔Is the collection of all assessments due through the end of the
fiscal year.
✔✔Extra Judicial (nonjudicial) Remedies - ✔✔Late charge or interest penalty, require
security deposit equal to certain number of months assessments, acceleration, suspend
owner's user privileges, and suspend owner's voting and other participation rights.
✔✔Judicial Remedies - ✔✔Record the association lien for public notice, foreclose the
lien, and personal money judgement (allows association to claim/collect rent from the
owner's tenant).
✔✔Foreclosure - ✔✔Is a legal proceeding filed in court whereby a party with a claim
against an owner can claim ownership of the unit involved in order to recover the money
it is owed.
,✔✔Personal Money Judgement - ✔✔Summary Judgement is a decision by a judge to
allow the community association to claim the owner's personal property to settle a
delinquent account.
✔✔Bankruptcy Declared - ✔✔Immediately contact legal counsel when you become
aware of a bankruptcy filing by an owner, immediately forward any bankruptcy notices
to your legal counsel, and immediately stop all collection efforts.
✔✔Types of Bankruptices - ✔✔Chapter 7, Chapter 11, and Chapter 13.
✔✔Chapter 7 - ✔✔Is called straight bankruptcy or liquidation. It involves the prompt
conversion of all individual's or corporation's non-exempt property to cash, and payment
of creditors to the extend possible.
✔✔Chapter 11 - ✔✔Is called a re-organization because it is designed to allow for an
orderly payment to creditors while enabling a corporation to continue to operate. Once a
judge approves a plan as "fair and equitable", it is binding and discharges all debts not
provided for under the plan.
✔✔Chapter 13 - ✔✔Is used to reorganize personal or non-corporate debt. A plan is
submitted to a judge for paying off all or some of the debt over a specified period of time
while waiving other debt that may have been incurred prior to filing for bankruptcy.
✔✔Bad Debt Write-Off - ✔✔Consists of recording an uncollectible debt as an expense
that the association must absorb.
✔✔Cash Basis - ✔✔This method records revenue when it is collected and expenses
when they are paid.
✔✔Accrual Basis - ✔✔This method records revenue when it is earned (or assessed to
owners) and expenses when they are incurred.
✔✔Modified Cash Basis - ✔✔This method records revenue on the accrual basis and
expenses on a cash basis with selected items reported on an accrual basis.
✔✔Statement of Revenue and Expense - ✔✔Records the community association's
financial transactions during a given period of time - generally for a given month plus the
fiscal year to date.
✔✔Three major components of a statement of revenue and expense - ✔✔Revenue,
Expense, and Excess Revenue Over Expense
, ✔✔Loss - ✔✔Occurs when expenses are greater than the income. Is indicated on a
statement of revenue and expense by putting the figure in parentheses.
✔✔Balance Sheet - ✔✔Is a summary of a community's financial position at a specific
point in time.
✔✔A balance sheet summarizes: - ✔✔What your community association owns, what
your community association owes, and the "net worth" of the association.
✔✔Three major components of a balance sheet - ✔✔Assets, Liabilities, and Members
equity or fund balance.
✔✔Deficit in member's equity - ✔✔When a community association's liabilities exceed its
assets. It occurs when a community association has incurred expenses that it cannot
pay until it collects future assessments from owners or sells assets.
✔✔Assets = Liabilities + Member's Equity - ✔✔Assets - Liabilities = Member's Equity
✔✔Warning Signs to Watch for When Reviewing Reports - ✔✔A steady decline in the
amount of cash on hand, the inability or failure to set aside budgeted additions to
replacement reserves, an increase in the amount of community association owes for
bills, the failure to reconcile bank statements monthly, significant and/or unexplained
differences between actual and budgeted figures for items, and unpaid amounts
showing as due between funds (such as the operating fund owes the money to the
reserve fund because the association had to use reserve funds to pay operating bills).
✔✔GAAP - ✔✔Accounting standards are called Generally Accepted Accounting
Principles. Their purpose is to provide uniformity among reports from different
preparers.
✔✔Independent Certified Public Accountant (CPA) - ✔✔Should not be a community
association employee or owner. Is certified by a state examine board as having fulfilled
the requirements of state law.
✔✔Engagement Letter - ✔✔Legally binding that describes nature of the work to be
done, type of report to be prepared, fee for services, time frame for the assignment, and
accountant's disclaimers.
✔✔Representation Letter - ✔✔States that the information of the community association
provides is true to the best of its knowledge, and describes the steps the community
association has taken to provide for the preparation of accurate and complete financial
statements.
