Trust Accounting Requirements Flashcards
6 cards from real TICO practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Trust Accounting Requirements flashcards as text
Under Ontario Regulation 26/05, what is the purpose of maintaining a designated trust account separate from operating funds?
Answer: To ensure that client funds are protected and available to be forwarded to suppliers or refunded to clients if necessary
The trust account exists to protect client funds by keeping them separate from operating funds, ensuring they are available for their intended purpose.
A travel agency maintains a single bank account for all transactions — client payments, operating expenses, and payroll. Under TICO's trust accounting requirements, this practice is:
Answer: A serious violation — client funds must be held in a dedicated trust account separate from all operating funds
Commingling client funds with operating or payroll funds in a single account is a fundamental violation of TICO's trust accounting requirements, regardless of software tracking.
When a travel agent collects a client's payment, what is the correct trust accounting procedure?
Answer: Deposit the full client payment into the trust account within two business days, then withdraw earned commission only when permissible under the Regulation
The full client payment must be deposited into the trust account within two business days. Commissions can only be withdrawn when legitimately earned and permissible under the Regulation.
Under TICO's trust accounting framework, which of the following trust account transactions is PERMITTED?
Answer: Withdrawing funds from the trust account to pay a supplier for travel services that are now due and confirmed
Withdrawing trust funds to pay a supplier for confirmed, due bookings is a permissible trust account disbursement under Ontario Regulation 26/05.
An agency's trust account is audited and found to have a shortfall — the balance is less than the total of outstanding client obligations. How serious is this finding?
Answer: Extremely serious — a trust account shortfall is a fundamental violation that may result in immediate registration suspension and consumer harm
A trust account shortfall is a fundamental violation indicating that client funds may have been misused. TICO treats this as a serious matter that can result in immediate enforcement action.
Under Ontario Regulation 26/05, a travel agent is required to prepare a monthly trust account reconciliation. What is the purpose of this reconciliation?
Answer: To verify that the trust account balance matches the total of all outstanding client obligations, confirming no shortfall exists
Monthly trust account reconciliation is required to verify that the trust account balance equals the total of all outstanding client obligations, ensuring no shortfall exists.