Term
| commercial reporting method |
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Definition
| combines operating and reserve activities in the same column. |
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Term
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Definition
| consists of preparing separate columns for operating, reserve, and any special funds. |
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Term
| statement of income and expense |
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Definition
| records the community association’s financial transactions during a given period of time—generally for a given month plus the fiscal year to date. It is a way to keep track of the community’s financial activity. |
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Term
| three major components of a statement of income and expense |
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Definition
| income, expense, net income (or loss) |
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Term
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Definition
| represents the earnings of the community association |
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Term
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Definition
| cost of goods and services used to operate and maintain the community’s property |
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Term
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Definition
| the amount left after deducting expenses from income |
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Term
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Definition
| comparing the community’s actual income and expenses with its planned or budgeted income and expenses. |
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Definition
| a summary of a community’s financial position at a specific point in time. It tells you how things stand on a certain date. |
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Term
| three major components of a balance sheet |
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Definition
| Assests, Liabilities, Members' equity |
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Term
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Definition
| include anything owned that has value. |
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Term
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Definition
| consist of what is owed to others or collected in advance (e.g. owner assessments received prior to the billed month). |
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Term
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Definition
| is called the fund balance under the fund method of reporting. It equals the difference between the community association’s assets and liabilities. Industry standards suggest a minimum balance of 2-5% of gross assessments with 10-15% being very good. |
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Term
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Definition
| Generally Accepted Accounting Principles. Their purpose is to provide uniformity among reports from different organizations. |
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Term
| independent certified public accountant (CPA) |
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Definition
| one who is not a community association employee or owner |
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Term
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Definition
| When your community hires a CPA, he or she will send this. Includes: Nature of the work to be done, Type of report to be prepared, Fee for services, Time frame for the assignment, Accountant’s disclaimers—statements about what the accountant’s services do not include |
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Term
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Definition
| CPA gives this to Association to review and sign. Includes: States that the information the community association provides is true to the best of its knowledge, Describes the steps the community association has taken to provide for the preparation of accurate and complete financial statements |
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Term
| statement of changes in members’ equity (or fund balances) |
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Definition
| a year-end financial statement that reconciles the beginning and ending members’ equity with results of operations for the period. |
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Term
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Definition
| summary of the flow of funds into and out of the community association |
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Term
| Notes to the financial statements |
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Definition
| accompany the CPA-prepared financial statements. These footnotes provide additional information to help the reader understand the community association’s financial situation. |
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Term
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Definition
| An examination of the accounting records and procedures of an organization by a CPA for the purpose of verifying the accuracy and completeness of financial records. |
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Term
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Definition
| a separate narrative (descriptive) report discussing the community association’s accounting system and controls and any weaknesses found in them during the audit. |
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Term
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Definition
| A less thorough, and therefore less costly, review of a community association’s financial activities. |
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Term
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Definition
| A presentation of financial statements by a CPA without the assurance that the information conforms to GAAP. |
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Term
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Definition
| Must be applied for, Is not the same as being exempt from taxes on income |
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Term
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Definition
| involve the purchase of anything with money value for the purpose of generating additional money over time |
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Term
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Definition
| the ease with which an investment can be converted into cash or a cash equivalent. |
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Term
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Definition
| is the amount of return on an investment. |
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Term
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Definition
| This method records income when it is collected and expenses when they are paid. |
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Term
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Definition
| This method records income when it is earned (or assessed to owners) and expenses when they are incurred or acquired. |
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Term
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Definition
| This method records income and expenses on a cash basis with selected items recorded on an accrual basis. Modified cash varies in format depending on the number of items accrued. |
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