Recording of Transactions in Books
of First Entry
Recording of transactions:
Transaction Types
Asset Asset & Equity Asset & Liabilities Equity & Liabilities
Purchasing an asset for Contribution of capital Purchasing an asset for Expenses on credit
cash Drawings by owner credit
Receipt of payment from Cash income Payment made to creditor.
debtor Credit income Entering into loan
Investing of cash Cash expenses agreement
Transfer from investment to
bank acc
Dr Asset Cr
Dr Asset Cr Dr Asset Cr Increase Decrease Dr Expense Cr
Increase Decrease Increase Decrease Increase Decrease
Dr Liabilities Cr
Dr Equity Cr Decrease Increase
Decrease Increase
Dr Income Cr
Decrease Increase
Dr Expense Cr
Increase Decrease
Account Types
Purpose of books of first entry:
Rule 54.6 of Law Society requires accounting records containing day to day transactions of monies received, held, or paid by
law practitioner on own their own/business account, for/on behalf of person (trust) be kept.
Books of first entry: books where transactions are listed when first occurred, with entries being made on daily basis before
posted to their respective ledger accounts.
Info in source docs is used to record entries in books of first entry.
Purpose of journals: to make detailed, chronological analysis of transactions as depicted by source docs .
Its beneficial for attorney’s firm to first analyse each transaction in journal or book of first entry.
For every transaction, a source doc needs to be completed.
Different Journals:
Business cash receipts journal Business cash receipts journal & business cash payments journal are used to record.
Business cash payments journal flows of cash into & out of business bank account.
Trust cash receipts journal Trust cash receipts journal & trust cash payments journal are used to record flows in
Trust cash payments journal & out of trust bank account.
Sheriffs’ journal Sheriffs’ journal is used to record claims for services rendered on credit by sheriffs.
Advocate’s journal Advocate’s journal is used to record claims for services rendered on credit by
advocate.
General journal General journal is used to record those transactions that can’t be recorded in any of
the other mentioned journals
Petty cash journal Petty cash journal is used to record flows of cash in & out of business petty cash.
, Transfer journal Transfer journal used for transfers from client’s trust creditor’s account to business
acc
Cash records:
Section 86(2) of Legal Practice Act, 28 of 2014 & rule 35.7 of Rules of Legal Practice Council, every practising attorney must
open & keep two separate bank accounts with a banking institution in the Republic:
Business Bank Account:
Used for receipts & payments relating ordinary business transactions.
Payments can be made from business bank account on behalf of clients, but these payments are not recommended.
Attorney shouldn’t make payments on behalf of client from business bank account based on promise from client that
amount will be returned.
Trust Bank Account:
Used for receipts of trust money entrusted by clients to attorney & payment of trust money to third parties as mandated by
client.
Bank statement must contain reference to fact that it’s an account opened & maintained in terms of section 86(2) of LPA.
Methods used to keep cash records:
1. Business money & trust money is recorded separately by:
o A cash receipts & cash payments journal for business transactions
o A cash receipts & cash payments journal for trust transactions
2. Combined cash book with bank column for business transactions & another bank column for trust transactions
Cash receipts:
Include both physical cash & electronic fund transfers received. Steps to record cash receipts:
Step 1. Initial procedures
Step 2. Initial procedures for the receipt of electronic fund transfers
Step 3. Identifying cash receipts
Step 4. Recording of cash receipts in the book of first entry
Step 5. Deposit the cash in bank accounts.
Date Doc Details Fol. Sundries Clients Bank
No. R R R
Name of client from whom Ledger account Amount to be credited if Amount to be credited Amount
cash is receipt of on whose number cash is received other when cash is received banked.
behalf of sundry account than from a client from clients.
Only one amount is debited to the bank account at the end of the month.
The other accounts are credited individually to the relevant accounts on the date of transaction.
Cash Payments:
Business entities make payments by electronic fund transfer (EFT), except in the case where small amounts such as postage
stamps or cleaning materials are purchased via the petty cash.
Attorney’s practice has separate series of source documents: one for business payments & one for payments from the trust
bank account.
Attorney must determine which account payment must be made.
There are different categories of cash payments:
a. General Business Expenses:
Money paid out by attorney for own account: office rent, insurance, telephone expenses, salaries, wages, membership fees.
b. Expenses incurred in respect of the clients of the attorney’s practice:
Paid from either business/trust bank account depending on whether client has money available in trust account.
If money was deposited in trust acc, without specifying its purpose, expenses must be paid from trust acc.
If money was deposited payment must be made from business acc.
Account statement must be prepared & sent to client/debtor.
Clients of an attorney’s
Payment made from trust acc – relevant trust creditor acc must be debited.
practice are debtors &
Payment of expenses from business acc on behalf of client is debited to relevant client/debtor
are included in current
acc.
assets in accounting
As in case of cash receipts, the attorney determines (by means of the client’s file) from which
records.
bank account (business or trust) the payment must be made.
of First Entry
Recording of transactions:
Transaction Types
Asset Asset & Equity Asset & Liabilities Equity & Liabilities
Purchasing an asset for Contribution of capital Purchasing an asset for Expenses on credit
cash Drawings by owner credit
Receipt of payment from Cash income Payment made to creditor.
debtor Credit income Entering into loan
Investing of cash Cash expenses agreement
Transfer from investment to
bank acc
Dr Asset Cr
Dr Asset Cr Dr Asset Cr Increase Decrease Dr Expense Cr
Increase Decrease Increase Decrease Increase Decrease
Dr Liabilities Cr
Dr Equity Cr Decrease Increase
Decrease Increase
Dr Income Cr
Decrease Increase
Dr Expense Cr
Increase Decrease
Account Types
Purpose of books of first entry:
Rule 54.6 of Law Society requires accounting records containing day to day transactions of monies received, held, or paid by
law practitioner on own their own/business account, for/on behalf of person (trust) be kept.
Books of first entry: books where transactions are listed when first occurred, with entries being made on daily basis before
posted to their respective ledger accounts.
Info in source docs is used to record entries in books of first entry.
Purpose of journals: to make detailed, chronological analysis of transactions as depicted by source docs .
Its beneficial for attorney’s firm to first analyse each transaction in journal or book of first entry.
For every transaction, a source doc needs to be completed.
Different Journals:
Business cash receipts journal Business cash receipts journal & business cash payments journal are used to record.
Business cash payments journal flows of cash into & out of business bank account.
Trust cash receipts journal Trust cash receipts journal & trust cash payments journal are used to record flows in
Trust cash payments journal & out of trust bank account.
Sheriffs’ journal Sheriffs’ journal is used to record claims for services rendered on credit by sheriffs.
Advocate’s journal Advocate’s journal is used to record claims for services rendered on credit by
advocate.
General journal General journal is used to record those transactions that can’t be recorded in any of
the other mentioned journals
Petty cash journal Petty cash journal is used to record flows of cash in & out of business petty cash.
, Transfer journal Transfer journal used for transfers from client’s trust creditor’s account to business
acc
Cash records:
Section 86(2) of Legal Practice Act, 28 of 2014 & rule 35.7 of Rules of Legal Practice Council, every practising attorney must
open & keep two separate bank accounts with a banking institution in the Republic:
Business Bank Account:
Used for receipts & payments relating ordinary business transactions.
Payments can be made from business bank account on behalf of clients, but these payments are not recommended.
Attorney shouldn’t make payments on behalf of client from business bank account based on promise from client that
amount will be returned.
Trust Bank Account:
Used for receipts of trust money entrusted by clients to attorney & payment of trust money to third parties as mandated by
client.
Bank statement must contain reference to fact that it’s an account opened & maintained in terms of section 86(2) of LPA.
Methods used to keep cash records:
1. Business money & trust money is recorded separately by:
o A cash receipts & cash payments journal for business transactions
o A cash receipts & cash payments journal for trust transactions
2. Combined cash book with bank column for business transactions & another bank column for trust transactions
Cash receipts:
Include both physical cash & electronic fund transfers received. Steps to record cash receipts:
Step 1. Initial procedures
Step 2. Initial procedures for the receipt of electronic fund transfers
Step 3. Identifying cash receipts
Step 4. Recording of cash receipts in the book of first entry
Step 5. Deposit the cash in bank accounts.
Date Doc Details Fol. Sundries Clients Bank
No. R R R
Name of client from whom Ledger account Amount to be credited if Amount to be credited Amount
cash is receipt of on whose number cash is received other when cash is received banked.
behalf of sundry account than from a client from clients.
Only one amount is debited to the bank account at the end of the month.
The other accounts are credited individually to the relevant accounts on the date of transaction.
Cash Payments:
Business entities make payments by electronic fund transfer (EFT), except in the case where small amounts such as postage
stamps or cleaning materials are purchased via the petty cash.
Attorney’s practice has separate series of source documents: one for business payments & one for payments from the trust
bank account.
Attorney must determine which account payment must be made.
There are different categories of cash payments:
a. General Business Expenses:
Money paid out by attorney for own account: office rent, insurance, telephone expenses, salaries, wages, membership fees.
b. Expenses incurred in respect of the clients of the attorney’s practice:
Paid from either business/trust bank account depending on whether client has money available in trust account.
If money was deposited in trust acc, without specifying its purpose, expenses must be paid from trust acc.
If money was deposited payment must be made from business acc.
Account statement must be prepared & sent to client/debtor.
Clients of an attorney’s
Payment made from trust acc – relevant trust creditor acc must be debited.
practice are debtors &
Payment of expenses from business acc on behalf of client is debited to relevant client/debtor
are included in current
acc.
assets in accounting
As in case of cash receipts, the attorney determines (by means of the client’s file) from which
records.
bank account (business or trust) the payment must be made.
