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Financial Management for Community Associations: Exam Review Questions and Answers, Exams of Nursing

A comprehensive review of key concepts in financial management for community associations, covering topics such as accounting methods, financial statements, budgeting, and debt collection. It includes multiple-choice questions and verified answers, making it a valuable resource for students and professionals seeking to understand the financial aspects of community association management.

Typology: Exams

2024/2025

Available from 04/03/2025

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Module 2: Financial Management from M100 Final Exam Review
Questions and Verified Answers
1. Which of the following accounting methods records revenue when it is collected
and expenses when the are paid?
a. cash basis
b. accrual basis
c. modified cash basis
d. modified accrual basis: a. cash basis
2. A occurs when expenses are greater than revenue
a. net income
b. net loss
c. net gain
d. net profit: b. net loss
3. Which is not one of the 3 major components of a balance sheet?
a. assets
b. liabilities
c. expenses
d. member's equit: c. expenses
4. True/False
A CPA's representation letter describes the nature of the work to be done, the tpe of
report to be prepared, the fee for services, the time frame for
the assignment, and the accountant disclaimers: False - the Engagement Letter does that
5. a is a ear-end financial report prepared b a CPA without the
assurance that the information conforms to GAAP
a. compilation
b. review
c. audit
d. opinion letter: a. compilation
6. Communit associations must file a federal income tax return ever ear: T/F: True
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Module 2: Financial Management from M100 Final Exam Review

Questions and Verified Answers

  1. Which of the following accounting methods records revenue when it is collected and expenses when the are paid? a. cash basis b. accrual basis c. modified cash basis d. modified accrual basis: a. cash basis
  2. A occurs when expenses are greater than revenue a. net income b. net loss c. net gain d. net profit: b. net loss
  3. Which is not one of the 3 major components of a balance sheet? a. assets b. liabilities c. expenses d. member's equit : c. expenses
  4. True/False A CPA's representation letter describes the nature of the work to be done, the t pe of report to be prepared, the fee for services, the time frame for the assignment, and the accountant disclaimers: False - the Engagement Letter does that
  5. a is a ear-end financial report prepared b a CPA without the assurance that the information conforms to GAAP a. compilation b. review c. audit d. opinion letter: a. compilation
  6. Communit associations must file a federal income tax return ever ỵ ỵ ear: T/F: True
  1. which of the following investment objectives for communit associations refers to the ease which which an investment can be converted into cash or a cash equivalent? a. safet ỵ b. liquidit ỵ c. ỵ ield d. treasur bills: b. liquiditỵ
  2. Each of the following statements regarding communit association assess- ments are true EXCEPT:
  1. True/False: when a communit association determines that a debt cannot be collected from an owner after a reasonable effort has been made, it should write off the bad debt: True
  2. A is a legal claim b one part (communit association) on the propert of another (delinquent owner) to obtain the pa ment of a debt or the satisfaction of an obligation:

a. foreclosure b. personal mone judgement c. lien d. bad debt write off: c. lien

  1. which of the following t pes of bankruptc is called a corporation reorga- nization because it is designed to allow for an orderl pa ment of creditors while enabling the corporation to continue business? a. chapter 7 b. chapter 11 c. chapter 13 d. chapter 21: b. chapter 11
  2. True/False: communit managers are ultimatel responsible for establish- ing, approving, and monitoring the communities budget: False - the board is
  3. Which of the following officers is responsible for ensuring that the draft budget is prepared and reviewed: a. treasurer b. president c. secretar ỵ d. vice president: a. treasurer
  4. Each of the following agencies are federall established secondar mort- gage institutions except: a. Environmental Protection Agenc ỵ b. Federal National Mortgage Association c. Veterans Administration d. Federal Home Loan Mortgage Corporation: a. Environmental Protection Agencỵ
  5. True/False: the two main components of a communit budget are revenue and expenses: true
  6. Which of the following is NOT a t pical source of revenue for a communit association? a. owner assessments b. major improvement expenses c. penalt fees

a special assessment c. maintaining a reserve acct equalizes the contributions of old and new owners d. maintaining a reserve account enhances resale values.: b. maintaining a reserve acct increases the likelihood that an assoc will require a special assessment

  1. which of the following is an example of a discretionar line item in a communit budget: a. newsletter b. income taxes c. utilities d. maintenance: a. newsletter
  2. True/False: with historical trend budgeting all line items are set to zero and the amount of funds allotted to each must be justified: False - that is zero based budgeting
  3. Utilizing a means managers and boards can obtain proposals from competent reserve providers and make informed business decisions to responsibl fund their replacement reserves: a. Communit Insurance and Risk Management Specialist b. Association Management Specialist c. professional communit association manager d. reserve specialist: d. reserve specialist