Which statement about the two types of strata funds is true?

• A. Operating Funds cover ongoing common expenses; Contingency Fund is a reserve to be used for less frequent needs
• B. Operating Funds are optional
• C. Contingency Fund finances daily operations
• D. There is no Contingency Fund

Answer: (A)

The important idea is how strata budgets separate ongoing costs from larger, infrequent costs. A strata corporation typically has two funds: an operating fund for day‑to‑day, ongoing common expenses—things like cleaning, utilities, routine maintenance, and management fees. The contingency reserve fund is a separate savings account set aside for less frequent, larger costs such as major repairs, replacements, or emergencies, not for daily operations.

So this statement is true because it correctly identifies the roles of both funds: operating funds cover ongoing expenses, while the contingency fund is a reserve for less frequent needs. The other options don’t fit because operating funds aren’t optional in a strata budget, the contingency fund isn’t used for daily operations, and there is typically a contingency reserve fund rather than no such fund.