Which is the correct description of the deposit rule for auto brokers?

• A. Deposits are not restricted and may be kept in the dealership's cash register
• B. Limit deposits to 2.5% of the purchase price and deposit them in a separate trust account
• C. Limit deposits to 1% of the purchase price and deposit them in a general account
• D. Only non-cash deposits are allowed

Answer: (C)

This item tests how auto brokers must handle buyer deposits to protect funds and keep records clear. The rule sets a strict cap on how large a broker can hold as a deposit and requires the funds to be placed where they can be tracked separately from regular operating money.

The best description says deposits are limited to 1% of the purchase price and must be deposited in a general account. The small 1% limit minimizes the amount tied up in a deposit, reducing risk for both the broker and the buyer, and placing the funds in a distinct account helps ensure there’s a clear, auditable trail of deposits.

The other options don’t fit because they suggest either a larger deposit, a different type of account, or restrictions that don’t align with the rule being tested (for example, suggesting no limit, misidentifying the required account type, or restricting to non-cash deposits).