Question 1
Which of the following is a common management control for ensuring maintenance work
is performed in a timely manner?
A. A purchase order system
B. An equipment warranties
C. A work order/response form
D. A contractor's invoice
CORRECT ANSWER
C. A work order/response form - A, B, and D speak to elements OTHER than a control to
ensure maintenance work is completed.
Question 2
The primary management control tool for identifying whether the association needs to
maintain a particular property element is:
A. Physical inspections
B. Association bylaws
C. Maintenance responsibility chart
D. Community asset inventory
CORRECT ANSWER
C. Maintenance responsibility chart along, with the governing documents, defines
parameters of association maintenance responsibility.
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@THE STUDY VAULT
,The other answers have no bearing on necessity of maintenance or maintenance
responsibility.
Question 3
In what type of a contract would a waiver of lien by recommended?
A. Repair of the HVAC system
B. Re-roofing the buildings
C. Repair of the pool pump
D. Annual tree pruning
CORRECT ANSWER
B. Re-roofing the buildings - Large contracts involving significant material purchase
and/or use of sub-contractors commonly include lien waivers and should be
recommended to the board.
A, C, and D typically do not include significant material purchases or the use of sub-
contractors so a waiver of lien is not necessary.
Question 4
What does "Co-Insurance" obligate the Association to do?
A. Pay the deductible
B. Maintain certain limits of insurance
C. Cover the depreciated value of all association buildings
D. Provide insurance for homeowners
CORRECT ANSWER
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@THE STUDY VAULT
, B. Maintain certain limits of insurance - Co-insurance seeks to the limits of insurance in
place at the time of a loss and speaks to insurance obligation for the parties involved in
the claim.
Question 5
When an association contracts out all of its services and has no employees, it is a best
business practice to:
A. Negotiate contracts within the bidding process.
B. Purchase employment practices liability insurance.
C. Assume the contractors carry their own insurance coverage.
D. Increase the coverage under the D&O insurance policy.
CORRECT ANSWER
A. Negotiate contracts within the bidding process.
Question 6
If an owner fails to receive notice of a meeting, the association is not responsible if the
owner:
A. Did not notify association of their current address.
B. Does not usually attend the meetings.
C. Already signed the petition to call the meeting.
D. Shares title with multiple owners.
CORRECT ANSWER
A. Did not notify association of their current address. It is the owner's responsibility to
provide current contact information to Management.
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@THE STUDY VAULT
, Question 7
What is the primary source of requirements when developing the association's annual
maintenance budget?
A. Governing documents
B. State law
C. Annual audit
D. Reserve Study
CORRECT ANSWER
A. Governing documents
Question 8
The best reasoning for recommending the modified accrual accounting method is that,
compared to cash accounting, it:
A. Will make future audit work more accurate.
B. More accurately reflects the association's financial condition.
C. Is more easily understood by board members.
D. Can be accomplishment more quickly.
CORRECT ANSWER
B. More accurately reflects the association's financial condition. Under the modified
accrual basis, also sometimes referred to as modified cash basis, some accounts, such as
assessment income, are maintained on the accrual basis and other accounts, such as
interest or other miscellaneous income accounts, and some expenses, such as
miscellaneous repairs, are maintained on a cash basis. The accrual of major expenses in
particular, such as a contract for landscaping, trash removal, etc., regardless of non-
receipt invoices, gives the read a much more accurate depiction of the association's
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@THE STUDY VAULT
Which of the following is a common management control for ensuring maintenance work
is performed in a timely manner?
A. A purchase order system
B. An equipment warranties
C. A work order/response form
D. A contractor's invoice
CORRECT ANSWER
C. A work order/response form - A, B, and D speak to elements OTHER than a control to
ensure maintenance work is completed.
Question 2
The primary management control tool for identifying whether the association needs to
maintain a particular property element is:
A. Physical inspections
B. Association bylaws
C. Maintenance responsibility chart
D. Community asset inventory
CORRECT ANSWER
C. Maintenance responsibility chart along, with the governing documents, defines
parameters of association maintenance responsibility.
1
@THE STUDY VAULT
,The other answers have no bearing on necessity of maintenance or maintenance
responsibility.
Question 3
In what type of a contract would a waiver of lien by recommended?
A. Repair of the HVAC system
B. Re-roofing the buildings
C. Repair of the pool pump
D. Annual tree pruning
CORRECT ANSWER
B. Re-roofing the buildings - Large contracts involving significant material purchase
and/or use of sub-contractors commonly include lien waivers and should be
recommended to the board.
A, C, and D typically do not include significant material purchases or the use of sub-
contractors so a waiver of lien is not necessary.
Question 4
What does "Co-Insurance" obligate the Association to do?
A. Pay the deductible
B. Maintain certain limits of insurance
C. Cover the depreciated value of all association buildings
D. Provide insurance for homeowners
CORRECT ANSWER
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@THE STUDY VAULT
, B. Maintain certain limits of insurance - Co-insurance seeks to the limits of insurance in
place at the time of a loss and speaks to insurance obligation for the parties involved in
the claim.
Question 5
When an association contracts out all of its services and has no employees, it is a best
business practice to:
A. Negotiate contracts within the bidding process.
B. Purchase employment practices liability insurance.
C. Assume the contractors carry their own insurance coverage.
D. Increase the coverage under the D&O insurance policy.
CORRECT ANSWER
A. Negotiate contracts within the bidding process.
Question 6
If an owner fails to receive notice of a meeting, the association is not responsible if the
owner:
A. Did not notify association of their current address.
B. Does not usually attend the meetings.
C. Already signed the petition to call the meeting.
D. Shares title with multiple owners.
CORRECT ANSWER
A. Did not notify association of their current address. It is the owner's responsibility to
provide current contact information to Management.
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@THE STUDY VAULT
, Question 7
What is the primary source of requirements when developing the association's annual
maintenance budget?
A. Governing documents
B. State law
C. Annual audit
D. Reserve Study
CORRECT ANSWER
A. Governing documents
Question 8
The best reasoning for recommending the modified accrual accounting method is that,
compared to cash accounting, it:
A. Will make future audit work more accurate.
B. More accurately reflects the association's financial condition.
C. Is more easily understood by board members.
D. Can be accomplishment more quickly.
CORRECT ANSWER
B. More accurately reflects the association's financial condition. Under the modified
accrual basis, also sometimes referred to as modified cash basis, some accounts, such as
assessment income, are maintained on the accrual basis and other accounts, such as
interest or other miscellaneous income accounts, and some expenses, such as
miscellaneous repairs, are maintained on a cash basis. The accrual of major expenses in
particular, such as a contract for landscaping, trash removal, etc., regardless of non-
receipt invoices, gives the read a much more accurate depiction of the association's
4
@THE STUDY VAULT
