In an irrevocable trust account, where should dividends be posted?

In an irrevocable trust account, dividends are typically posted to the income portion of the trust. This is because the income generated from investments, such as dividends from stocks, is meant to benefit the beneficiaries of the trust in a way that aligns with the objectives of the trust.

When dividends are declared, they represent a return on investment that is intended to provide financial benefit to the beneficiaries, often used for distributions according to the terms set forth in the trust document. By recording dividends as income, the trust complies with its obligations to distribute earnings to beneficiaries as appropriate. This treatment emphasizes the ongoing benefit and financial performance of the trust assets, ensuring that the income can be tracked and allocated per the trust's guidelines.

In contrast, posting dividends to other categories like principal, interest, or capital would not accurately reflect the nature of these earnings and could misrepresent the financial standing of the trust. Therefore, allocating dividends as income aligns with the common accounting practices for trust management and helps uphold the intent of the trust arrangement.