Question

What is the primary factor that management should consider before accepting a trust account?

a. Whether the department has the expertise to properly administer the trust account.
b. Other relationships that the bank has with the customer that contribute to the profitability of the institution.
c. Whether the trust account can be administered at a profit.
d. None of the above.

Answer 1

The correct answer is option a. Whether the department has the expertise to properly administer the trust account.

Step-by-step explanation:

When management is considering whether to accept a trust account, the primary factor they should evaluate is a. Whether the department has the expertise to properly administer the trust account. This is crucial as proper administration ensures that the obligations of the trust are met, legal requirements are complied with, and the beneficiaries' interests are safeguarded.

While profitability and customer relationships are also important, ensuring the capability to administer the account appropriately is key to avoiding legal issues and maintaining a reputable business.