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M-100 PART 2 QUESTIONS AND ANSWERS 100% CORRECT
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M-100 PART 2 QUESTIONS AND ANSWERS 100% CORRECT
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M-100 PART 2 QUESTIONS AND ANSWERS 100%CORRECT
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
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