A WA agency has earned $4,000 in management fees held in trust. The principal wants to pay the office rent straight from the trust account using that money. What does the handbook say?
Correct Answer
C) Transfer the fees to the general account first, then pay expenses
The WA trust account handbook says an agent must transfer any entitlement from a transaction from the trust account to the agency's general account before using it to meet general operating expenses. Operating or personal expenses should not be paid direct from trust, and as best practice fees should be transferred at least weekly once the agent is entitled to them.
Why This Is the Correct Answer
Earned fees go to the general account before they are used for agency expenses.
Why the Other Options Are Wrong
Background Knowledge for Finance Taxation
Exam Tip for Finance Taxation
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