SUMMARY SOLICITORS ACCOUNTS EXAM TEST (QUESTIONS AND ANSWERS) UPDATED

SUMMARY SOLICITORS ACCOUNTS EXAM TEST (QUESTIONS AND ANSWERS) UPDATED what system is used for recording solicitors accounts? - CORRECT ANSWER-double entry bookkeeping what are the two aspects of every financial transaction to be logged? - CORRECT ANSWER-Debit DR Credit CR what are the two aspects if the firm pays cash to buy premises? - CORRECT ANSWER1. firm has less cash 2. firm has acquired an asset in the form of premises examples of what will go in the left/debit side column? - CORRECT ANSWER-expense incurred asset acquired/increased liability reduced/extinguished cash gained examples of what will go in the right/ Credit side? - CORRECT ANSWER-income earned asset disposed of/reduced liability incurred/increased cash paid how must the transaction be recorded when an owner sets up and puts in cash? - CORRECT ANSWER-as normal- business regarded as completely separate= transaction must be recorded from the point of view of the company what is recorded in the cash account? - CORRECT ANSWER-receipts into and payments out of the bank account where will record of receipts and payments from petty cash be recorded? - CORRECT ANSWER-petty cash register what accounts are not referred to as ledger accounts? - CORRECT ANSWER-cash account petty cash purpose of the SRA accounts rules? - CORRECT ANSWER-ensure money belonging to clients is safe and kept separate from money belonging to the firm - reduce risk of misuse who is bound by the SRA accounts rules? - CORRECT ANSWER-authorised bodies their managers and employees licenced bodies- but only applies to activities regulated by the SRA who is jointly and severally responsible for compliance by the authorised body, its managers and its employees - CORRECT ANSWER-managers where must client money be kept? - CORRECT ANSWER-the client bank account what is client money ? - CORRECT ANSWER-money held: a) related to regulated services b) on behalf of 3rd party in relation to regulated services delivered by you c)as a trustee or holder of a specified office or appointment d) in respect of fees and any unpaid disbursements where will billed money be put? - CORRECT ANSWER-business account- as it is not client money is money received for disbursements already paid client money? - CORRECT ANSWER-no- as it is paid in reimbursement= business money paid into business account what if firm bills client for anticipated future bills and disbursements? - CORRECT ANSWER-paid into business account - but should be cautious requirements for the establishment of a client account? - CORRECT ANSWER-bank or building society in england and wales include the word client does the bank have any recourse or right against money in a client bank account in respect of any liability of the solicitor to the bank - CORRECT ANSWER-no must client money be available on demand? - CORRECT ANSWER-yes- unless alternative arrangement what is the general rule for paying money into the client bank account? - CORRECT ANSWER-must be paid in promptly - but depends on circumstances exceptions to general rule of paying in promptly? - CORRECT ANSWER-a) where held as trustee and paying would conflict with obigations relating to specified office b) payments from Legal Aid Agency for firms costs c) firm agrees alternative arrangement when must client money be returned? - CORRECT ANSWER-promptly as soon as no longer any proper reason for holding the funds two options if firm receives mixed receipt? - CORRECT ANSWER-split cheque pay into one bank account then transfer share to correct one