Fiduciary accounting is the specialized reporting of receipts, disbursements, gains, losses, and allocations between income and principal for estates and trusts. It follows state principal-and-income acts, not GAAP. Accurate fiduciary accounting demonstrates prudence, supports beneficiary distributions, and forms the basis for court approvals and tax filings.

Trustees keep detailed ledgers separating income and principal, attach statements, and circulate accountings for beneficiary approval. Advisors coordinate distribution policies and confirm liquidity for expenses and taxes. Clear reporting fosters trust and accelerates court approvals when required.