Formative Assessment Flashcards
What is the agent’s general trading business account?
The general trading business account is the working account for the business into which the monies earned by the agency is deposited. This money is put towards business expenses. Such as rent, wages, bills, etc.
What is the purpose of a trust account?
The purpose of a trust account is to receive, hold and disburse funds belonging to someone else as a stakeholder.
What is the one major purpose of recording transactions into the agency’s trust account records?
The systematic and sequential recording financial information of every type of business transaction in journals and ledgers on daily basis.
Are you required to set up a trust account if you are starting up, or running a real estate agency? What legislation covers this scenario?
Yes, Estate Agents (General, Accounts and Audit) Regulations 2018
What two fiduciary obligations does an agent have to their client maintain trust funds on their behalf?
The duty of loyalty and care
Can an agency earn interest on trust account funds? Which act and section applies?
No. All interest earned is paid to by the banks into the Victorian Property Fund - Section 73 of the Estate Agents Act 1980
List two ways an agent can ensure the security of the trust account.
a) Only an OIEC or Principal Agent, or a person authorised in writing by the OIEC can make a withdrawal
b) At no time must payments from the trust account be in cash
Can trust funds that are received by an agency, be banked into an agent’s general business account? What relevant legislation supports your answer?
No. All trust money must be deposited into the agency’s trust account. By the requirements of the Estate Agents Regulations 2018.
Trust money received by a real estate agency, must be processed immediately. What information should be recorded on a trust account receipt for each transaction?
All of the above.
