EXPENSES

Homeowners are interested in knowing both how their assessments fees are determined and how such fees are spent. An accounting system, which records, classifies and summarizes monetary transactions into various financial statements, helps to prepare a budget, shows the amount of assessment fees and how such fees are spent, and provides the basic information necessary for the preparation of income taxes... There are two main bases for accounting: cash and accrual. Under the cash basis of accounting, revenue (income) is recorded (counted) when cash (or a check) is received; expenses are recorded when they are paid in cash (or a check). The accrual basis of accounting records both revenues and expenses when incurred, or without regard to the time of receipt or payment. For example, a homeowner might pay June, July and August assessment fees on May 31. Under the cash basis, all three months of assessments would be counted as revenue in May since that was when the funds were received; the..