Question 1
Community association managers must be familiar with federal income tax requirements
and options because:
a. The IRS will intermittently interview the manager concerning tax filing status.
b. States require managers to be knowledgeable in this area of community association
finance.
c. Under federal tax code, all organizations are table on their income unless specifically
exempted.
d. The accountant will require input from the community association when the tax return is
prepared.
CORRECT ANSWER
Under federal tax code, all organizations are table on their income unless specifically
exempted.
Question 2
Which of the following is a guarantee by a surety to protect the association if a contractor
fails to perform of finish their work?
a. Payment Bond.
b. Performance Bond.
c. Third Party Insurance.
d. Fidelity Insurance.
CORRECT ANSWER
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, Performance Bond
Question 3
If you want to know the difference between actual and budget figures for a revenue
account, to which documents should you refer?
a. Balance Sheet and Budget.
b. Statement of Cash Flow and Budget.
c. Statement of Profit and Loss.
d. Statement of Income and Expenses and Budget.
CORRECT ANSWER
Statement of Income and Expenses and Budget.
Question 4
A significant decline in the amount of investments is most likely the result of:
a. Failure to invest association funds properly.
b. Seasonal timing of expenses.
c. Expenditures out of reserve funds.
d. Failure to collect delinquent assessments.
CORRECT ANSWER
Expenditures out of reserve funds.
Question 5
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,In the hierarchy of governing documents, which of the following is the highest in the
hierarchy?
a. Board Resolutions.
b. Recorded Plat Map.
c. Declaration.
d. Articles of Incorporation.
CORRECT ANSWER
Recorded Plat Map
Question 6
What are the two essential financial documents the board of directors should use to
determine the amount of funds available for an unbudgeted expense?
a. Statement of cash flows and accounts receivable report.
b. Balance sheet and statement of revenue and expense.
c. Statement of cash flows and check register.
d. Replacement reserve report and general ledger.
CORRECT ANSWER
Balance sheet and statement of revenue and expense.
Question 7
The manager is not usually responsible for preparing the:
a. Investment report.
b. Tax returns.
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, c. Annual budget
d. Variance report.
CORRECT ANSWER
Tax returns.
Question 8
On what basis is the community association reporting its finances when the financial
reports indicate income when received and expenses when paid?
a. Cash basis.
b. Modified accrual basis.
c. Accrued basis.
d. Modified cash basis.
CORRECT ANSWER
Cash basis.
Question 9
The interim financial report should, at minimum, include a:
a. Statement of changes in member's equity, cash flow analysis, and notes to the financial
statements.
b. Statement of reserve funding, investment results, and accounts receivable.
c. Statement of income and expenses, account balance, and a balance sheet.
d. Statement of cashflow, balance, and bank statements.
CORRECT ANSWER
Statement of income and expenses, account balance, and a balance sheet.
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Community association managers must be familiar with federal income tax requirements
and options because:
a. The IRS will intermittently interview the manager concerning tax filing status.
b. States require managers to be knowledgeable in this area of community association
finance.
c. Under federal tax code, all organizations are table on their income unless specifically
exempted.
d. The accountant will require input from the community association when the tax return is
prepared.
CORRECT ANSWER
Under federal tax code, all organizations are table on their income unless specifically
exempted.
Question 2
Which of the following is a guarantee by a surety to protect the association if a contractor
fails to perform of finish their work?
a. Payment Bond.
b. Performance Bond.
c. Third Party Insurance.
d. Fidelity Insurance.
CORRECT ANSWER
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@THE STUDY VAULT
, Performance Bond
Question 3
If you want to know the difference between actual and budget figures for a revenue
account, to which documents should you refer?
a. Balance Sheet and Budget.
b. Statement of Cash Flow and Budget.
c. Statement of Profit and Loss.
d. Statement of Income and Expenses and Budget.
CORRECT ANSWER
Statement of Income and Expenses and Budget.
Question 4
A significant decline in the amount of investments is most likely the result of:
a. Failure to invest association funds properly.
b. Seasonal timing of expenses.
c. Expenditures out of reserve funds.
d. Failure to collect delinquent assessments.
CORRECT ANSWER
Expenditures out of reserve funds.
Question 5
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,In the hierarchy of governing documents, which of the following is the highest in the
hierarchy?
a. Board Resolutions.
b. Recorded Plat Map.
c. Declaration.
d. Articles of Incorporation.
CORRECT ANSWER
Recorded Plat Map
Question 6
What are the two essential financial documents the board of directors should use to
determine the amount of funds available for an unbudgeted expense?
a. Statement of cash flows and accounts receivable report.
b. Balance sheet and statement of revenue and expense.
c. Statement of cash flows and check register.
d. Replacement reserve report and general ledger.
CORRECT ANSWER
Balance sheet and statement of revenue and expense.
Question 7
The manager is not usually responsible for preparing the:
a. Investment report.
b. Tax returns.
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, c. Annual budget
d. Variance report.
CORRECT ANSWER
Tax returns.
Question 8
On what basis is the community association reporting its finances when the financial
reports indicate income when received and expenses when paid?
a. Cash basis.
b. Modified accrual basis.
c. Accrued basis.
d. Modified cash basis.
CORRECT ANSWER
Cash basis.
Question 9
The interim financial report should, at minimum, include a:
a. Statement of changes in member's equity, cash flow analysis, and notes to the financial
statements.
b. Statement of reserve funding, investment results, and accounts receivable.
c. Statement of income and expenses, account balance, and a balance sheet.
d. Statement of cashflow, balance, and bank statements.
CORRECT ANSWER
Statement of income and expenses, account balance, and a balance sheet.
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