CPPREP4005 - Prepare to work with real estate trust accounts

CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)
Assessment Questions
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

What you need to do:
Answer the questions below by writing in the space provided.
You are required to answer all questions correctly. If incorrect answers are provided, you will
receive feedback in your ‘grades’ section and you will be requiring to resubmit your work
What you will need:
Research materials such as books, internet, magazines, workplace documentation etc. Access
to legislative and regulatory documentation.
What you need to submit:
Your answers to these questions.
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

Assessment Questions
Question 1
What is the name of the relevant legislation (including sections if applicable) in your state/territory
that outlines the requirements for operating a real estate trust account?
The Real Estate and Business Agents Act 1978 is the relevant legislation that outlines the
requirements for operating a real estate trust account in Australia. The legislation allows
individuals to not only open a real estate trust account, but also manage it. It outlines the various
rules and regulations that are associated with the same (Aalbers, 2019). The licensing device
administered with the aid of Consumer Protection ensures simplest certainly certified people are
allowed to operate in the actual property industry. It requires applicants to have positive
qualifications, enjoy, and be a person of desirable man or woman and fame.
Question 2
List 5 examples of transactions that would NOT be entered into a trust account accounting
system. (e.g. payment of wages to office staff).
Transactions that would not be entered into a trust account accounting system include payment
of wages to office staff, any deficiency that was accidental or caused mainly by an error by an
authorized financial institution, any old transactions etc. also, if there is any transaction that is
undertaken for the trustee is also not entered in to a trust account (Boyd, 2020). Therefore, these
are some transactions that should not be include as they can affect the overall system of
accounting.
Question 3
Complete the following table.
Give (2) reasons that inaccuracies/discrepancies can occur in trust accounts and a treatment to
address these.
Source of Discrepancy Treatment Strategy to Address the Discrepancy
E.g. Dishonoured cheque  Ensure that a reversal is completed in the cashbook
 Do not accept cheques as method of payment
Misallocating Trust Funds One should never withdraw cash from their trust fund as it
can result into either a loss of license or heavy penalties. A
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)

legal action can also be taken for treating the discrepancy.
Lack of Full use of trust
accounting software
Make full use of the software in order to stay competitive
within the real estate industry. Training sessions as well as
online webinars can also be conducted (Davidson, 2017). This
will help in eliminating the respective discrepancy and ensure
a smooth function. It will also help in gaining a competitive
advantage.
Question 4
List (4) transactions you are likely to be handling on behalf of your clients / Principals and
group the transactions according to whether they are a receipt or a payment.
Receipts Payments
e.g. Rent e.g. Rent Settlement
Cash received from debtors Purchase fixed assets from a supplier
Commission received Investment in other business
Income from interest Paying an employee
Income from dividend Purchasing shares
Question 5
What is the purpose of trust accounts in real estate?
The main purpose of trust accounts is to help individuals avoid the costly probate process.
This is because a trust account is basically a legal arrangement via which funds are held by
a trustee for the primary benefit of the beneficiary (Duska, Duska and Kury, 2018). The main
purpose of trust accounts in real estate is to protect all individuals that are involved in a
real estate transaction. The accounts are governed heavily by different legislations and a
failure can lead to heavy penalties. Therefore, a trust account helps in ensuring that best
trust accounting is practiced. This is because it helps in ensuring smooth transactions.
Question 6
What are the requirements under the legislation in relation to being able to operate a real
estate trust account?
In order to operate a real estate trust account, under the PSAA Regulations 2003, the
CPPREP4005 - Prepare to work with real estate trust accounts (Release 1)