A Trustee Has a Duty to Make Proper Allocation of Benefits

question 72

Multiple Choice

A trustee has a duty to make proper allocation of benefits and burdens between income beneficiaries and remaindermen. Which of the following statements is true concerning this allocation?

• A) Current expenses are chargeable to the remaindermen.
• B) Extraordinary expenses are chargeable to the remaindermen.
• C) Money paid for the use of trust property is chargeable to the remaindermen.
• D) Any profit from the use of trust property is allocated to the remaindermen.

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Definitions:

Journal Entry

A journal entry is a record in accounting that logs a transaction in the financial statements of a business.

Allowance Method

An accounting technique used to account for bad debts by estimating uncollectible accounts at the end of each period.

Allowance for Doubtful Accounts

A contra asset account used to estimate the portion of a company's accounts receivable that may not be collected.

Write-off

The process of recognizing that a portion of a company's inventory or accounts receivable is no longer valuable and removing it from the financial statements.