Florida Community Association Manager Practice Exam

Which of the following is NOT a required line item in Cash Basis Financial Reports for Condominiums?

1. Deferred Maintenance

2. Income from sales

3. Insurance

4. Utilities

The correct answer is: Income from sales

In the context of Cash Basis Financial Reports for Condominiums, it's essential to understand the components that are required to accurately reflect the financial position and operations of a condominium association. The key purpose of these reports is to provide a clear and concise overview of the cash inflow and outflow associated with the community's operations. Income from sales, while a component that might appear in some financial contexts for a condominium association, is not typically categorized as a required line item in Cash Basis Financial Reporting. This is because such reports are focused on cash transactions that have actually occurred during the reporting period, rather than anticipated or potential income from sales. On the other hand, line items such as deferred maintenance, insurance, and utilities are critical for understanding the immediate cash expenses and obligations of the association. Deferred maintenance gives insight into upcoming costs that may impact future cash flow, insurance reflects necessary coverage expenses, and utilities capture ongoing operational expenses that must be monitored closely. Thus, the identification of income from sales as not being a required line item highlights the focus of cash basis accounting on actual cash movements rather than projections or variances related to asset sales or other revenue strategies.