ACCOUNTING BASICS

• Accrual Method of Accounting-keeps track of all financial activities, including revenue as it is earned (as opposed to when it is received) and expenses as the obligation is incurred (as opposed to when it is paid). This makes possible a more accurate determination of the financial condition of the association at any point in time. 

• Deferred Maintenance Funding-allocates funds for maintenance that occurs regularly, but not necessarily annually

• Reserve Funding-allocates funds for future repair and replacement of common area assets.  The ideal method of providing for these future expenses is by the systematic allocation of funds to ensure that such funds are available when needed.  All owners should contribute to the repair and replacement of these assets, not just the Owners at the time the asset needs attention.