Condo Accounting Question

B.F. from New Haven County, Connecticut writes:

Dear Mister Condo,

What’s the difference between operating expense and non-operating expense?

Mister Condo replies:

B.F., I love a good condo accounting question but since I am not an accountant, I decided to ask Sam Tomasetti, CPA of Tomasetti, Kulas & Company, P.C. to give us a proper answer. Here’s what Sam had to say:

Since condominiums use fund accounting, the bookkeeping is laid out in such a way as to capture transactions in distinct “buckets” based upon the reason for the transaction.  The two most common of these are operating and reserve funds.  The operating items are transactions that allow an association to handle its day to day affairs.  The reserve items are transactions that help maintain the long term market value of an association by handling major repairs and improvements.