Trust funds should utilize the accrual basis of accounting.

Question

Quizplus · Accepted Answer

Trust funds are managed to generate income for a specific beneficiary or purpose. To accurately measure income and expenses, the accrual accounting method should be used. This method records revenue and expenses when they are earned or incurred, regardless of when the money is actually received or paid out. This provides a more accurate representation of the trust fund's financial position and performance.

Trust Funds Should Utilize the Accrual Basis of Accounting