A Corrupt Trustee Dishonestly Withdraws Some of the Trust Funds

question 7

Multiple Choice

A corrupt trustee dishonestly withdraws some of the trust funds and pays them into his own bank account. He use some to make gifts to members of his family who do not know the source of the money. Which of the following statements are true (more than one applies) ?

• A) The trustee is in breach of trust and will be personally liable to restore to the trust the value of what he took from the trust.
• B) The beneficiaries can recover from the trustee any sums which he took and which are still in his possession.
• C) The beneficiaries can recover from any members of the family any sums which they received which can be proved to have been derived from the trust and which are still in their possession.
• D) The family members are personally liable, as volunteers, to restore to the trust fund the value of any sums which they received and which can be proved to have been derived from the trust but which they have spent or otherwise disposed of.

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Definitions:

FIFO

An accounting method for inventory valuation where the first items purchased or produced are the first ones used or sold.

Average Cost

A method of inventory valuation where the cost of goods sold and ending inventory are calculated based on the average cost of all similar items held in inventory.

Inventory System

The method a company uses to manage and track its inventory, ensuring the right quantity of products at the right time and minimizing costs.

Perpetual

A system of inventory management wherein updates are made continuously to the inventory accounts after each purchase or sale.