When accounting for the issue of shares placing application monies in a separate Cash Trust account is required:

Question

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Placing application monies in a separate Cash Trust account is required before the share issue is finalised because the money does not belong to the company until the shares are issued. Some or all of the application monies may need to be refunded if the shares are not issued, so keeping them separate in a Cash Trust account makes it easier to manage and refund the funds. Additionally, this helps the company comply with any legal requirements for handling of funds received from shareholders.

When Accounting for the Issue of Shares Placing Application Monies