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

Question

Quizplus · Accepted Answer

Placing application monies in a separate cash trust account is required because before the share issue is finalized, the money does not belong to the company and some or all of it may need to be refunded. This is a legal requirement to ensure the protection of investors' funds. Option A is partially correct, as the funds will eventually need to be remitted to ASIC, but this is not the primary reason for the separate account. Option C is incorrect, as it is not a requirement by the bank. Option D is also incorrect, as administrative ease is not the primary reason for the separate account, though it may be a secondary benefit.

When Accounting for the Issue of Shares Placing Application Monies