M100 PART 2 questions and answers
with solutions
What is a budget? - ANSWER Annual financial plan for an association. Provides an estimate of a
community's revenue & expenses for a specified period of time.
Budget establishes what? - ANSWER What services & programs the community will provide
When will they be done.
How they will be done
Budget has many uses - ANSWER Way for community to plan its activities
- ANSWER Basis for determining owner assessments
- ANSWER Together w/ financial reports, it's a means of controlling the community's financial
operations
- ANSWER Provides for continuity of community services
- ANSWER Helps community maintain its desired quality of life
- ANSWER Helps to minimize the unexpected
Sources of Budget Requirements - ANSWER Federal laws & regulations
, - ANSWER State statutes, regulations & court decisions: all states have statutes that enable the
establishment of condo & corporations & some have them for establishing planned
communities
- ANSWER Local laws & regulations: local govt may have codes, laws & possibly taxes which
your comm assoc must comply. Any requirements in these areas could result in expense items
for your budget.
- ANSWER Governing documents: they do 2 things:
Define property to be maintained by the com assoc
Specify maint & service responsibilities & requirements
Budget Components - ANSWER Revenue: Collective items or amounts of income apportioned
for common expenses.
- ANSWER Sources of Revenue:
Owner Assessment: An assessment is the owner's financial obligation to the comm assoc during
a given time period-usually 1 year.
Covers the owner's share of the common expenses.
Annual assessment may be paid monthly, quarterly, or annual basis, depending on governing
docs.
Most of a community's revenue comes from owner assessments.
- ANSWER Special Assessment: Onetime assessment often voted on by the owners to cover a
major expense that wasn't included in the annual budget or replacement reserve
- ANSWER Interest or dividends earned on their cash savings & investments
with solutions
What is a budget? - ANSWER Annual financial plan for an association. Provides an estimate of a
community's revenue & expenses for a specified period of time.
Budget establishes what? - ANSWER What services & programs the community will provide
When will they be done.
How they will be done
Budget has many uses - ANSWER Way for community to plan its activities
- ANSWER Basis for determining owner assessments
- ANSWER Together w/ financial reports, it's a means of controlling the community's financial
operations
- ANSWER Provides for continuity of community services
- ANSWER Helps community maintain its desired quality of life
- ANSWER Helps to minimize the unexpected
Sources of Budget Requirements - ANSWER Federal laws & regulations
, - ANSWER State statutes, regulations & court decisions: all states have statutes that enable the
establishment of condo & corporations & some have them for establishing planned
communities
- ANSWER Local laws & regulations: local govt may have codes, laws & possibly taxes which
your comm assoc must comply. Any requirements in these areas could result in expense items
for your budget.
- ANSWER Governing documents: they do 2 things:
Define property to be maintained by the com assoc
Specify maint & service responsibilities & requirements
Budget Components - ANSWER Revenue: Collective items or amounts of income apportioned
for common expenses.
- ANSWER Sources of Revenue:
Owner Assessment: An assessment is the owner's financial obligation to the comm assoc during
a given time period-usually 1 year.
Covers the owner's share of the common expenses.
Annual assessment may be paid monthly, quarterly, or annual basis, depending on governing
docs.
Most of a community's revenue comes from owner assessments.
- ANSWER Special Assessment: Onetime assessment often voted on by the owners to cover a
major expense that wasn't included in the annual budget or replacement reserve
- ANSWER Interest or dividends earned on their cash savings & investments
