Accounting Glossary for Condo Boards
A plain-language reference for the financial terms you’ll encounter as a board member.
Accounts Payable: Money the corporation owes to vendors or contractors for services already received but not yet paid.
Accounts Receivable: Money owed to the corporation — typically condo fees that have been charged but not yet collected.
Accrual Accounting: A method of recording revenue and expenses when they are earned or incurred, not when cash is received or paid.
Audit: An independent examination of financial statements by a licensed accountant, resulting in an opinion on whether the statements are fairly presented.
Balance Sheet: A financial statement showing the corporation’s assets, liabilities, and net assets at a specific point in time.
Capital Expenditure: A significant purchase or improvement funded from the reserve fund rather than the operating budget.
Chart of Accounts: The organized list of all financial categories used to track the corporation’s income, expenses, assets, and liabilities.
Compilation (Notice to Reader): The lowest level of accounting engagement, where an accountant assembles financial information without providing assurance on its accuracy.
Deficit: When expenses exceed revenue in a given period.
Fiscal Year: The 12-month accounting period used by the corporation.
Fund Accounting: A method of tracking money by purpose rather than just by account. For condo corps, this means tracking the operating fund and reserve fund completely separately.
Income Statement (Statement of Operations): A financial statement showing revenue and expenses over a period of time.
Operating Fund: The account used for day-to-day expenses. Separate from the reserve fund.
Reserve Fund: Money set aside specifically for major future repairs and replacements of common property.
Reserve Fund Study: A professional assessment of the corporation’s major components, used to determine appropriate reserve fund contributions.
Review Engagement: A mid-level accounting engagement providing limited assurance on financial statements.
Special Assessment: A one-time charge levied on unit owners to cover an unexpected shortfall or major expense not covered by the reserve fund.
Surplus: When revenue exceeds expenses in a given period.
Trial Balance: A list of all accounts and their balances, used to verify that debits equal credits before producing financial statements.
Disclaimer: For general informational purposes only. Not legal, financial, accounting, or tax advice.