M-206 EXAM WITH COMPLETE QUESTIONS AND ACCURATE
ANSWERS RATED A+
Duty of Care - ANSWER Requires a board if director to act in a reasonable and informed
manner when participating in the Boards decisions and its oversight of the day to day
operations
Duty of Loyalty - ANSWER Requires the Director to exercise power in good faith and in best
interest of the community rather than the directors own interest of the interest of another
person or entity.
Identify budget line items - ANSWER Obligation, need, expectation
Types of budget line items - ANSWER Mandatory, discretionary
Contingency planning rule of thumb minimum - ANSWER 2-5%
Contingency planning rule of thumb very good - ANSWER 10-15%
Historical trend budgeting - ANSWER Estimates line items based on past trends
Zero based budgeting - ANSWER Budgeting that ignores historical budgetary allocations and
identifies the cost that are necessary to implement agreed strategies- verified need for a
, budgeted line item
RxQxTxN - ANSWER Ratexquantityxtimexnumber
Basis in estimating individual line items for zero based budgeted - ANSWER Rate, quantity,
time, number
Two parts of reserve study - ANSWER Physical and financial analysis
Baseline funding - ANSWER Reserve funding goal of keeping the reserve cash balance above
zero
Full funding - ANSWER 100% funded
Threshold funding - ANSWER Keeping the reserve balance above a specified dollar or precent
funded amount
Statutory funding - ANSWER Method based on local statutes
The concept of basic investment principles - ANSWER The board of directors, supported with
the advice of the manager, has a fiduciary responsibility to all unit owners to make sure
reserve funds are invested properly
ANSWERS RATED A+
Duty of Care - ANSWER Requires a board if director to act in a reasonable and informed
manner when participating in the Boards decisions and its oversight of the day to day
operations
Duty of Loyalty - ANSWER Requires the Director to exercise power in good faith and in best
interest of the community rather than the directors own interest of the interest of another
person or entity.
Identify budget line items - ANSWER Obligation, need, expectation
Types of budget line items - ANSWER Mandatory, discretionary
Contingency planning rule of thumb minimum - ANSWER 2-5%
Contingency planning rule of thumb very good - ANSWER 10-15%
Historical trend budgeting - ANSWER Estimates line items based on past trends
Zero based budgeting - ANSWER Budgeting that ignores historical budgetary allocations and
identifies the cost that are necessary to implement agreed strategies- verified need for a
, budgeted line item
RxQxTxN - ANSWER Ratexquantityxtimexnumber
Basis in estimating individual line items for zero based budgeted - ANSWER Rate, quantity,
time, number
Two parts of reserve study - ANSWER Physical and financial analysis
Baseline funding - ANSWER Reserve funding goal of keeping the reserve cash balance above
zero
Full funding - ANSWER 100% funded
Threshold funding - ANSWER Keeping the reserve balance above a specified dollar or precent
funded amount
Statutory funding - ANSWER Method based on local statutes
The concept of basic investment principles - ANSWER The board of directors, supported with
the advice of the manager, has a fiduciary responsibility to all unit owners to make sure
reserve funds are invested properly
