Question

How should Sara handle the trust account portion of her record-keeping?

A) In columnar form, with separate records for each beneficiary in each transaction
B) By retaining all banking records for trust accounts
C) By retaining banking records organized by fiscal year
D) In the same form as her other business accounts for consistency

Answer 1

Sara should manage trust account records in columnar form with separate entries for each beneficiary and retain all banking records for trust accounts, organized by fiscal year.

Step-by-step explanation:

When handling trust account records, it is important for Sara to maintain accurate and clear record-keeping practices. The best method is to handle them in columnar form, with separate records for each beneficiary for each transaction (Option A). This ensures that all transactions are accounted for and that the records for each beneficiary are organized and easily traceable. Additionally, it is essential to retain all banking records for trust accounts (Option B) and organize these records by fiscal year (Option C), to allow for efficient management and compliance with legal and professional standards. Trust accounts should not necessarily be kept in the same manner as other business accounts due to the fiduciary responsibility inherent in trust management (Option D).