What does the reserve cash flow statement show?

• A. A cash flow statement showing only operating activities
• B. A financial statement showing the amount to be funded and the amount to be expended from the replacement fund over a period
• C. A budget monitoring statement
• D. A tax return for the association

Answer: (B)

Reserve cash flow planning shows how the replacement fund will be funded and spent over time. The best answer describes a financial statement that projects, for a given period, both the amounts to be added to the replacement fund and the amounts expected to be expended from it for major repairs and replacements. This helps a community association plan funding so lifecycle costs are covered and funding gaps are avoided. Other options don’t fit because they describe operating-only cash flows, general budget monitoring, or tax returns, none of which specifically address the funding and expenditure timing of the replacement reserve.