Trust Fund Handling CA withOUT answers 15. In general, trust fund conversion and other violations of the rules and regulations regarding the handling of trust funds can lead to __________. 16. Earnest money belongs to who? 17. Brokers must account for property received from clients because ____. 18. Trust funds include ____. 19. In California, a ________ is considered a cash equivalent for a purchase deposit. 20. A broker is receiving an unlawful inducement to place trust funds in a certain bank if he or she accepts ______. 21. If a broker receives a deposit from a buyer and does not give it immediately to the principal or deposit it in a trust fund account, the broker must ______. 22. A broker is allowed to deposit a maximum of _____ into a trust account to pay account charges without committing commingling. 23. The two types of trust fund accounting systems allowed in California are the _________. 24. The “Record of All Trust Funds Received-Not Placed in Broker’s Trust Account” form is used to ______. 25. A broker is required to keep records of undeposited checks received from a client unless __________. 26. Which of the following defines trust funds? 27. When do the commissioner’s regulations apply to the handling of non-trust funds? 28. Promissory notes are regulations _________. 29. For a broker to hold a buyer’s check that is payable to the broker uncashed, ________. 30. A broker must have the seller’s written permission to ___________. 1. What is the proper way for a broker to handle an advance fee? 2. Which of the following is TRUE of a broker’s trust account? 3. When a broker receives purchase money deposits for more than eight broker-owned properties in one year, pending completion of the contracts the broker must ______. 4. For a trust fund with a number of beneficiaries, the aggregate trust fund liability at any point in time is _________. 5. A trust fund account contains $6,000. There are four beneficiaries, each due an amount of $1,500. After beneficiary #1 receives a full distribution of his balance, what is the aggregate trust fund liability of the broker? 6. A trust fund overage occurs when _________. 7. Which of the following is an example of commingling? 8. How long may a broker leave earned fees and commissions in the trust account without causing a commingling violation? 9. Under what circumstances is a broker required to file a report documenting the yearly number and volume of escrows conducted? 10. When does the time period for retaining transaction records begin? 11. To use an electronic system for the storage of trust account records, a broker must ensure that _____. 12. When does a broker have to pay the cost of an audit ordered by the commissioner? 13. What happens if an examination of a broker’s trust fund records shows a significant irregularity? 14. In addition to other penalties, a licensee found guilty of improper handling of trust funds may be liable for ______.
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a. Loss of license
b. Criminal sanctions
c. Civil liability
d. Any of the above
a. The buyer until offer accepted
b. The buyer and seller after offer becomes contract
c. The seller at closing
d. All of the above
a. providing service for clients is good business practice.
b. clear accounting is necessary in all business transactions.
c. otherwise they cannot calculate commissions accurately.
d. they have a fiduciary duty to do so.
a. deposit check made payable to the broker.
b. rents received from broker-owned properties.
c. operating funds for the brokerage firm.
d. accumulated commissions from completed transactions.
a. promissory note
b. bank deposit slip
c. post-dated check
d. presently-dated check
a. the gift of a reduced fee for maintaining the trust account.
b. booklet that explains good trust fund management.
c. a checkbook cover worth $5.00.
d. a $9.00 pen with the bank’s logo on it.
a. turn it over to a bonded employee.
b. place it in a neutral escrow depository.
c. deposit it in the firm’s operating account.
d. keep it in a locked drawer.
a. $0
b. $100
c. $150
d. $200
a. columnar and GAAP-compliant.
b. row and column.
c. journal and logbook.
d. linear and geometric.
a. track all trust funds received and paid out.
b. track of the broker’s daily trust fund liability.
c. track the balance of funds held by the broker without deposit in the trust account.
d. track the balance of trust funds due to beneficiaries of the trust account.
a. they represent advance payment for services to be rendered.
b. they are made payable to service providers and total no more than $1,000.
c. they are negotiable by the broker.
d. they are intended as a refundable security deposit.
a. Funds belonging to someone other than the broker
b. Any funds deposited in a trust fund account
c. Cash belonging to a principal
d. Things of value held by a broker on the part of another
a. When they become commingled with trust funds
b. As soon as they are deposited in a firm’s business bank account
c. When they are delivered in the form of a cash equivalent
d. Whenever the funds used to purchase real estate
a. not accepted as a cash equivalent in a California real estate transaction.
b. universally accepted as a cash equivalent in California business transactions.
c. the only acceptable form of money as a purchase deposit in a California real estate transaction.
d. the equivalent of checks in California real estate transactions.
a. the seller must give the broker written permission to hold it while he or she considers the offer.
b. the buyer must give the broker written instructions to hold it until the offer is accepted.
c. the check must be a cashier’s check drawn on a local bank.
d. the check must be for an amount less than $3,000.
a. place a buyer’s purchase deposit in a trust account rather than holding it uncashed.
b. hold a buyer’s purchase deposit uncashed before acceptance of the offer.
c. return a buyer’s purchase money deposit before acceptance of the offer.
d. return any part of a buyer’s purchase money after acceptance of the offer.
a. Place it in a trust account
b. Return it to the maker of the check within 48 hours
c. Hold it until the date on the check
d. Use it only to pay expenses on behalf of the client
a. It may be a subaccount of the broker’s personal checking account.
b. It may not be an interest-bearing account requiring prior notice for withdrawals.
c. It may be placed in any financial institution operating in the United States or Canada.
d. It may not have subaccounts for individual owners of funds.
a. deposit the funds in a neutral escrow depository.
b. deposit the funds in the broker’s trust account.
c. deposit the funds in the broker’s personal account.
d. ask another broker to hold the funds until the completion of the transaction.
a. the total of the amounts originally contributed by each beneficiary.
b. the amount each beneficiary originally contributed to the fund plus any interest earned.
c. the amount due any individual beneficiary.
d. the total of the balances due all the beneficiaries.
a. $4,500
b. $6,000
c. $7,500
d. $1,500
a. there are more beneficiaries than are reflected in the broker’s records.
b. there is more money in a trust fund account than is owed to the beneficiaries.
c. there is an automated deposit to the trust account.
d. the trust fund liability exceeds the account balance.
a. A broker issues a check against the trust account to pay an office expense.
b. A broker pays a bank service charge with his own money.
c. A broker neglects to record a deposit to the trust account.
d. A broker deposits rents from a broker-owned property into the broker’s trust account.
a. 31 days
b. 30 days
c. 28 days
d. 25 days
a. The broker conducted any escrow transactions during the year.
b. The broker conducted at least three escrow transactions during the year.
c. The broker’s escrow activities amounted to at least $500,000 for the year.
d. The broker conducted five escrow transactions during the year.
a. On the receipt of any document related to the transaction
b. At the time any offer is presented
c. At the completion of the transaction or from the signing of the listing if not completed
d. At the time any transaction document is signed
a. the storage medium can be altered when an audit shows a discrepancy.
b. the records cannot be viewed from the brokerage office.
c. the original paper records on which the electronic files are properly disposed of.
d. the record originates from a document that was created close to the time of the event reflected in the record
a. When the commissioner finds the broker guilty of a trust fund violation
b. When an examination of the broker’s records shows an audit is needed
c. When the Commissioner suspects the broker of commingling
d. When the broker fails to produce a document requested by the auditor
a. The Commissioner immediately takes disciplinary action.
b. The Commissioner orders an audit without further notice.
c. The Commissioner gives 30-day notice of a pending audit.
d. The broker’s license is immediately suspended.
a. reimbursement to the Federal Deposit Insurance Corporation for the total amount insured.
b. monetary restitution to the beneficiaries.
c. criminal prosecution by the State of California for bank fraud.
d. federal prosecution under the Glass-Stegall Act.