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