Iowa Real Estate Practice Exam

From what type of account does a broker typically pay utility bills and salaries?

1. Personal account

2. Separate savings account

3. Business operating account

4. Commission account

The correct answer is: Business operating account

A broker typically pays utility bills and salaries from a business operating account. This account is specifically designed for managing the day-to-day financial activities of a business. It facilitates the payment of regular expenses, such as utilities and employee salaries, ensuring that the business can operate smoothly and meet its financial obligations. The business operating account is distinct from personal accounts, which are used for individual financial transactions and should not intermingle with business finances. This separation is crucial for legal and tax purposes, helping to maintain clear financial records. Additionally, while separate savings accounts may hold funds earmarked for savings or investments, they are not typically used for managing regular operational expenses. Commission accounts, also known as trust accounts, are used to hold client funds, typically for transactions and earnest money deposits, rather than for covering a broker's business overhead.