M100 MODULE 2: LESSON 3: FINANCIAL
STATEMENTS WITH COMPLETE SOLUTIONS
100%
What are two primary purposes of financial reports?
- To provide their internal & external users with the information needed to make appropriate
decisions on behalf of or regarding the community association
- to enable the community association board and manager to control the community's financial
operations.
Three Accounting Methods
1) Cash Basis- This method records revenue when it is collected and expenses when they are paid
2) Accrual Basis- This method records revenue when it is earned (or accessed to owners) and
expenses when they are incurred.
3) Modified Cash Basis: This method records revenue on the accrual basis and expenses on a cash
basis with selected items recorded on an accrual basis. (aka modified accrual) most com,on type
Brainpower
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Statement of Revenue & Expenses
A financial statement showing how much the organization makes or loses during a given reporting
period; Also called earnings report; income statement; profit and loss statement; statement of
operations
Three major components of a statement of revenue and expense:
a) Revenue: the earnings of the community association
- Cash basis- revenues received and deposited
- Accrual basis- revenues earned including assessments from owners but not received yet
- modified cash basis- revenue is recorded on the accrual basis.
b) Expenses- cost of goods and services used to operate and maintain the community's property
- cash- amounts paid
- accrual- amounts incurred whether or not
paid
-modified cash basis- generally reported on a
cash basis
c) Excess Revenue over Expense- amount left after deducting revenue into income.
Loss
expenses are greater than income
Balance Sheet
summary of a community's financial position at a specific point of time; balances what the community
association owns (assets), what it owes to others
e.g. typically prepared every month to monitor associations expenses
STATEMENTS WITH COMPLETE SOLUTIONS
100%
What are two primary purposes of financial reports?
- To provide their internal & external users with the information needed to make appropriate
decisions on behalf of or regarding the community association
- to enable the community association board and manager to control the community's financial
operations.
Three Accounting Methods
1) Cash Basis- This method records revenue when it is collected and expenses when they are paid
2) Accrual Basis- This method records revenue when it is earned (or accessed to owners) and
expenses when they are incurred.
3) Modified Cash Basis: This method records revenue on the accrual basis and expenses on a cash
basis with selected items recorded on an accrual basis. (aka modified accrual) most com,on type
Brainpower
Read More
Statement of Revenue & Expenses
A financial statement showing how much the organization makes or loses during a given reporting
period; Also called earnings report; income statement; profit and loss statement; statement of
operations
Three major components of a statement of revenue and expense:
a) Revenue: the earnings of the community association
- Cash basis- revenues received and deposited
- Accrual basis- revenues earned including assessments from owners but not received yet
- modified cash basis- revenue is recorded on the accrual basis.
b) Expenses- cost of goods and services used to operate and maintain the community's property
- cash- amounts paid
- accrual- amounts incurred whether or not
paid
-modified cash basis- generally reported on a
cash basis
c) Excess Revenue over Expense- amount left after deducting revenue into income.
Loss
expenses are greater than income
Balance Sheet
summary of a community's financial position at a specific point of time; balances what the community
association owns (assets), what it owes to others
e.g. typically prepared every month to monitor associations expenses
