BPP LPC – Solicitors’ Accounts Exam Notes
Exam Structure
- Part A = MCQs and short-form questions. Know and apply SRA Accounts Rules. Read 3
guidance notes in Handbook. 20 marks.
- Part B = Double-entry bookkeeping. Making relevant entries.
- Part C = Acting on a purchase property transaction. Creating a financial statement. 30 marks.
à Double entry bookkeeping.
- SRA Accounts Rules.
- Client money vs office money. Must be kept separate – Rule 4.1.
- Client money is defined Rule 2.1.
o e.g. money received from the client “on account of costs”.
o e.g. money received in respect of unpaid costs or expenses.
- The current balance on the client ledger account should be readily ascertainable.
- Entries should be made in chronological order.
- Client ledger (what the firm holds for the client) balance ALWAYS CR or 0, Office ledger (what
the client owes the firm) balance ALWAYS DR or 0.
Suggested Approach:
1) Is this a client or office transaction?
2) If there is an entry to make in the client ledger (client side OR office side) turn to the client
ledger first (ledgers are logical).
3) Is money coming in or going out? If no money, is the client’s debt increasing/decreasing? Make
the relevant CR or DR entry in the relevant client ledger.
4) Complete ‘Date’, ‘Details’ (name of double entry book and a description of the transaction in
brackets) and ‘Balance’ (incl. CR or DR).
o e.g. Client ledger: ABC Ltd (on account of costs).
5) Complete the other part of the double entry (NB never mix client and office entries).
Cheques payable to the Client
- Money, or payments, can sometimes be received which relate to the client but not to the
work the firm has done, or is doing, for the client.
- If, for example, a cheque made payable to the client is received from a third party to forward
on to the client, it is good practice to make a note in that client’s ledger recording both the
receipt of and the handing over of the cheque.
Withdrawals of client money can only be made from the client account if sufficient funds are held on
behalf of that specific client to make the payment – Rule 5.3.
à Pay disbursements out of client account whenever possible, unless directed to the contrary.
- The client cash ledgers record the total amount of client money coming into, going out of and
held in the client account. Each individual client ledger shows how much of that pool of client
money belongs to each individual client.
- Therefore, the total of the balances on the client ledgers must always be equal to the total
balance in the client account.
Solicitors’ Accounts – Distinction Level Revision Notes | Page 1 of 7
Exam Structure
- Part A = MCQs and short-form questions. Know and apply SRA Accounts Rules. Read 3
guidance notes in Handbook. 20 marks.
- Part B = Double-entry bookkeeping. Making relevant entries.
- Part C = Acting on a purchase property transaction. Creating a financial statement. 30 marks.
à Double entry bookkeeping.
- SRA Accounts Rules.
- Client money vs office money. Must be kept separate – Rule 4.1.
- Client money is defined Rule 2.1.
o e.g. money received from the client “on account of costs”.
o e.g. money received in respect of unpaid costs or expenses.
- The current balance on the client ledger account should be readily ascertainable.
- Entries should be made in chronological order.
- Client ledger (what the firm holds for the client) balance ALWAYS CR or 0, Office ledger (what
the client owes the firm) balance ALWAYS DR or 0.
Suggested Approach:
1) Is this a client or office transaction?
2) If there is an entry to make in the client ledger (client side OR office side) turn to the client
ledger first (ledgers are logical).
3) Is money coming in or going out? If no money, is the client’s debt increasing/decreasing? Make
the relevant CR or DR entry in the relevant client ledger.
4) Complete ‘Date’, ‘Details’ (name of double entry book and a description of the transaction in
brackets) and ‘Balance’ (incl. CR or DR).
o e.g. Client ledger: ABC Ltd (on account of costs).
5) Complete the other part of the double entry (NB never mix client and office entries).
Cheques payable to the Client
- Money, or payments, can sometimes be received which relate to the client but not to the
work the firm has done, or is doing, for the client.
- If, for example, a cheque made payable to the client is received from a third party to forward
on to the client, it is good practice to make a note in that client’s ledger recording both the
receipt of and the handing over of the cheque.
Withdrawals of client money can only be made from the client account if sufficient funds are held on
behalf of that specific client to make the payment – Rule 5.3.
à Pay disbursements out of client account whenever possible, unless directed to the contrary.
- The client cash ledgers record the total amount of client money coming into, going out of and
held in the client account. Each individual client ledger shows how much of that pool of client
money belongs to each individual client.
- Therefore, the total of the balances on the client ledgers must always be equal to the total
balance in the client account.
Solicitors’ Accounts – Distinction Level Revision Notes | Page 1 of 7
