CPPREP4005 Prepare to Work With Real Estate Trust Accounts - Assessment Task 1

ASSESSMENT TASK 1 – Multiple Choice Questions

Please review the questions below and select the correct answer, e.g., a or b

1. A trust account is a bank account where you can hold money…
   1. for payment to staff superannuation funds
   2. on behalf of another person
   3. available to pay the agencies debtors

2. Trust accounting…
   1. is a system of record management to meet legislative requirements
   2. ensures trust money and accounts are always accurate
   3. requires agents to buy a special accounts system
   4. all above
   5. a and b only

3. What are the types of trust money?

(You may select more than one option)

1. staff wages
2. rental payments
3. payments made for advertising in advance
4. reimbursement for expenses
5. sales deposits

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4. When opening a trust account, there are a few requirements that must be met. These include:
   1. an agent must notify Consumer Affairs Victoria (CAV) via ‘myCAV’ within 14 days of a trust account being opened.
   2. the name of the trust account must include the name under which the agent is licensed to carry on business. In most cases, this will be the registered name of the agency.
   3. the words ‘estate agency business statutory trust account’ or ‘estate agency business statutory trust a/c’ must also be in the name of the account. An agent should not repeat the words ‘estate agency business’ if they form part of the name of the agency.
   4. an agent must pay any banking fees for trust accounts from their general business account.
   5. all above
   6. a and b only

5. When should a receipt be issued if an agency receives trust money in the form of cash?
   1. immediately
   2. by the end of the week
   3. after the end of month reporting has been completed (bank reconciliation)

6. The trust account receipt must contain…
   1. the name under which the estate agent carries on business as an estate agent
   2. the number of the receipt
   3. the date the receipt is made out and, if different, the date on which the trust money is received
   4. the amount of the money received
   5. the form in which the money was received including in cash or by cheque or by electronic funds transfer or otherwise
   6. the name of the person from whom the money was received
   7. the name and reference number or other identification of the person on whose behalf the money was received
   8. particulars sufficient to identify the purpose for which the money was received
   9. the name of the person who made out the receipt
   10. all above

7. Is it necessary to bank money received by an agent for reimbursement of expenses into a trust account?
   1. yes
   2. no

8. Are all receipts and payments of trust account money summarised in the trust account cash journals?
   1. yes
   2. no

9. Should access to the trust accounts be limited to trained staff only?
   1. yes
   2. no

10. Trust account cheques used for withdrawals must…
    1. be marked ‘not negotiable’
    2. not be made payable to cash
    3. both above

11. All agents are required to have a knowledge of trust account requirements.
    1. yes, it is part of basic real estate training
    2. no, it is only required for agency staff required to attend to trust account record-keeping

12. Trust account records must be kept for a period of…
    1. 3 years
    2. 4 years
    3. 5 years beginning on 30 September after the making of the record
    4. at least 7 years
    5. all above
    6. a and c only

13. Is it ok for trust accounts to become overdrawn and fixed with no other action?
    1. yes
    2. no

14. All deductions for commission, advertising, GST, and auction fees where applicable should be checked against…
    1. original listing authority
    2. contract of sale
    3. both above

15. Which of the following assist when looking to minimise inaccuracies and discrepancies in trust accounting?
    1. staff training on internal procedures where they are authorised to be part of the trust accounting process.
    2. accurate and detailed policies and procedures should detail the information required for transactions.
    3. staff access to trust records should be limited as described in their position descriptions
    4. staff rotation through common trust accounting tasks to ensure familiarity of procedures
    5. all the above

16. A trust account reconciliation statement must be prepared and verified by the principal agent…
    1. every month, within 14 days after the end of each month
    2. each week, within 3 days after the end of each week
    3. every quarter, within 15 days after the end of each quarter
    4. all above

17. Do the monthly trust account reconciliation statements need to be retained to be presented to the auditor for any audit?
    1. yes
    2. no

18. Who can conduct a trust account audit?
    1. a person registered with CPA Australia, the National Institute of Accountants, or the Institute of Chartered Accountants in Australia
    2. a registered company auditor
    3. a person nominated by your state or territory regulatory authority
    4. all above