Module 2: Financial Management from M100 Exam Questions With Complete Solutions.

Which of the following accounting methods records revenue when it is collected and expenses when they are paid? a. cash basis b. accrual basis c. modified cash basis d. modified accrual basis - Answer a. cash basis A ___________ occurs when expenses are greater than revenue a. net income b. net loss c. net gain d. net profit - Answer b. net loss Which is not one of the 3 major components of a balance sheet? a. assets b. liabilities c. expenses d. member's equity - Answer c. expenses True/False A CPA's representation letter describes the nature of the work to be done, the type of report to be prepared, the fee for services, the time frame for the assignment, and the accountant disclaimers - Answer False - the Engagement Letter does that a _________ is a year-end financial report prepared by a CPA without the assurance that the information conforms to GAAP a. compilationb. review c. audit d. opinion letter - Answer a. compilation Community associations must file a federal income tax return every year: T/F - Answer True which of the following investment objectives for community associations refers to the ease which which an investment can be converted into cash or a cash equivalent? a. safety b. liquidity c. yield d. treasury bills - Answer b. liquidity Each of the following statements regarding community association assessments are true EXCEPT: a. assessments penalize residents for violating association rules b. an assessment is the owner's financial obligation to the community association during a given period of time c. an assessment for an owner's share of the common expenses is a binding legal obligation based on the community association's governing documents d. an annual assessment may be paid on a monthly, quarterly, or annual basis - Answer a. assessments penalize residents for violating association rules Because a community association relies on the timely collection of assessments in order to meet operating expense requirements, delinquent payments may result in each of the following EXCEPT: a. property beginning to appear run down b. budget surplus c. disharmony between paying owners and delinquent ones d. essential maintenance becoming unaffordable - Answer b. budget surplus