KRANDOM CMCA PRACTICE TEST
QUESTIONS WITH VERIFIED ANSWERS
Which of the following is a common management control for ensuring maintenance work is performed
in a timely manner?
A. A purchase order system
B. An equipment warranties
C. A work order/response form
D. A contractor's invoice - C. A work order/response form - A, B, and D speak to elements OTHER than a
control to ensure maintenance work is completed.
The primary management control tool for identifying whether the association needs to maintain a
particular property element is:
A. Physical inspections
B. Association bylaws
C. Maintenance responsibility chart
D. Community asset inventory - C. Maintenance responsibility chart along, with the governing
documents, defines parameters of association maintenance responsibility.
The other answers have no bearing on necessity of maintenance or maintenance responsibility.
In what type of a contract would a waiver of lien by recommended?
A. Repair of the HVAC system
B. Re-roofing the buildings
C. Repair of the pool pump
D. Annual tree pruning - B. Re-roofing the buildings - Large contracts involving significant material
purchase and/or use of sub-contractors commonly include lien waivers and should be recommended to
the board.
,A, C, and D typically do not include significant material purchases or the use of sub-contractors so a
waiver of lien is not necessary.
What does "Co-Insurance" obligate the Association to do?
A. Pay the deductible
B. Maintain certain limits of insurance
C. Cover the depreciated value of all association buildings
D. Provide insurance for homeowners - B. Maintain certain limits of insurance - Co-insurance seeks to the
limits of insurance in place at the time of a loss and speaks to insurance obligation for the parties
involved in the claim.
When an association contracts out all of its services and has no employees, it is a best business practice
to:
A. Negotiate contracts within the bidding process.
B. Purchase employment practices liability insurance.
C. Assume the contractors carry their own insurance coverage.
D. Increase the coverage under the D&O insurance policy. - A. Negotiate contracts within the bidding
process.
If an owner fails to receive notice of a meeting, the association is not responsible if the owner:
A. Did not notify association of their current address.
B. Does not usually attend the meetings.
C. Already signed the petition to call the meeting.
D. Shares title with multiple owners. - A. Did not notify association of their current address. It is the
owner's responsibility to provide current contact information to Management.
What is the primary source of requirements when developing the association's annual maintenance
budget?
A. Governing documents
B. State law
, C. Annual audit
D. Reserve Study - A. Governing documents
The best reasoning for recommending the modified accrual accounting method is that, compared to cash
accounting, it:
A. Will make future audit work more accurate.
B. More accurately reflects the association's financial condition.
C. Is more easily understood by board members.
D. Can be accomplishment more quickly. - B. More accurately reflects the association's financial
condition. Under the modified accrual basis, also sometimes referred to as modified cash basis, some
accounts, such as assessment income, are maintained on the accrual basis and other accounts, such as
interest or other miscellaneous income accounts, and some expenses, such as miscellaneous repairs, are
maintained on a cash basis. The accrual of major expenses in particular, such as a contract for
landscaping, trash removal, etc., regardless of non-receipt invoices, gives the read a much more accurate
depiction of the association's financial standing, as the accruals serve to alert the reader to recognition
of obligations that the association must meet.
TRUE OR FALSE:
The basic authority in a community association lies with the developer. - FALSE
The board of directors in a community association has a _____________ to act in the best interests and
for the benefit of the community as a whole.
a. bond
b. fiduciary duty
c. ballot
d. quorum - b. fiduciary duty
When developing a rule, it must be consistent with:
A. Fine schedules as approved by the courts
B. Board recommendations and resolutions
C. Guidelines established within the governing documents
QUESTIONS WITH VERIFIED ANSWERS
Which of the following is a common management control for ensuring maintenance work is performed
in a timely manner?
A. A purchase order system
B. An equipment warranties
C. A work order/response form
D. A contractor's invoice - C. A work order/response form - A, B, and D speak to elements OTHER than a
control to ensure maintenance work is completed.
The primary management control tool for identifying whether the association needs to maintain a
particular property element is:
A. Physical inspections
B. Association bylaws
C. Maintenance responsibility chart
D. Community asset inventory - C. Maintenance responsibility chart along, with the governing
documents, defines parameters of association maintenance responsibility.
The other answers have no bearing on necessity of maintenance or maintenance responsibility.
In what type of a contract would a waiver of lien by recommended?
A. Repair of the HVAC system
B. Re-roofing the buildings
C. Repair of the pool pump
D. Annual tree pruning - B. Re-roofing the buildings - Large contracts involving significant material
purchase and/or use of sub-contractors commonly include lien waivers and should be recommended to
the board.
,A, C, and D typically do not include significant material purchases or the use of sub-contractors so a
waiver of lien is not necessary.
What does "Co-Insurance" obligate the Association to do?
A. Pay the deductible
B. Maintain certain limits of insurance
C. Cover the depreciated value of all association buildings
D. Provide insurance for homeowners - B. Maintain certain limits of insurance - Co-insurance seeks to the
limits of insurance in place at the time of a loss and speaks to insurance obligation for the parties
involved in the claim.
When an association contracts out all of its services and has no employees, it is a best business practice
to:
A. Negotiate contracts within the bidding process.
B. Purchase employment practices liability insurance.
C. Assume the contractors carry their own insurance coverage.
D. Increase the coverage under the D&O insurance policy. - A. Negotiate contracts within the bidding
process.
If an owner fails to receive notice of a meeting, the association is not responsible if the owner:
A. Did not notify association of their current address.
B. Does not usually attend the meetings.
C. Already signed the petition to call the meeting.
D. Shares title with multiple owners. - A. Did not notify association of their current address. It is the
owner's responsibility to provide current contact information to Management.
What is the primary source of requirements when developing the association's annual maintenance
budget?
A. Governing documents
B. State law
, C. Annual audit
D. Reserve Study - A. Governing documents
The best reasoning for recommending the modified accrual accounting method is that, compared to cash
accounting, it:
A. Will make future audit work more accurate.
B. More accurately reflects the association's financial condition.
C. Is more easily understood by board members.
D. Can be accomplishment more quickly. - B. More accurately reflects the association's financial
condition. Under the modified accrual basis, also sometimes referred to as modified cash basis, some
accounts, such as assessment income, are maintained on the accrual basis and other accounts, such as
interest or other miscellaneous income accounts, and some expenses, such as miscellaneous repairs, are
maintained on a cash basis. The accrual of major expenses in particular, such as a contract for
landscaping, trash removal, etc., regardless of non-receipt invoices, gives the read a much more accurate
depiction of the association's financial standing, as the accruals serve to alert the reader to recognition
of obligations that the association must meet.
TRUE OR FALSE:
The basic authority in a community association lies with the developer. - FALSE
The board of directors in a community association has a _____________ to act in the best interests and
for the benefit of the community as a whole.
a. bond
b. fiduciary duty
c. ballot
d. quorum - b. fiduciary duty
When developing a rule, it must be consistent with:
A. Fine schedules as approved by the courts
B. Board recommendations and resolutions
C. Guidelines established within the governing documents
