Which of the following is not a typical source of revenue for a community association?

Which of the following is not a typical source of revenue for a community association?

• A. Owner assessments
• B. Penalty fees
• C. Major improvement expenses
• D. Interest

Answer: (C)

The thing being tested is what counts as revenue versus spending for a community association. Revenue comes in as funds the association collects or earns, while expenses are what it spends to run and maintain the property. Major improvement expenses are not revenue because they are costs incurred to upgrade or replace capital assets. They’re funding needs, typically paid from reserves, special assessments, or financing rather than from the association’s income streams. In contrast, owner assessments provide the primary operating revenue; penalties for late payments and interest on outstanding balances also add to revenue, helping the association cover ongoing costs.

The thing being tested is what counts as revenue versus spending for a community association. Revenue comes in as funds the association collects or earns, while expenses are what it spends to run and maintain the property.

Major improvement expenses are not revenue because they are costs incurred to upgrade or replace capital assets. They’re funding needs, typically paid from reserves, special assessments, or financing rather than from the association’s income streams. In contrast, owner assessments provide the primary operating revenue; penalties for late payments and interest on outstanding balances also add to revenue, helping the association cover ongoing costs.