SUMMARY SOLICITORS ACCOUNTS VERIFIED EXAM TEST

SUMMARY SOLICITORS ACCOUNTS VERIFIED EXAM TEST money received for costs in payment of a bill or agreed fee - client or office money? - CORRECT ANSWER-Office Money money received as an advance or on account of costs generally - client or office money? - CORRECT ANSWER-Client Money money received to cover disbursements which have not yet been paid - client or office money? - CORRECT ANSWER-Generally Client Money - limited exception at 12.7(e) - money received for disbursements not yet paid but for which firm has incurred liability eg account at Land Reg where pays monthly for searches. Exception does NOT apply to unpaid 'professional' disbursements even where firm has incurred liability - still = Client Money here. Money held for a principal - client or office money? - CORRECT ANSWER-Office money - R12.8 Do NOT have to record receipt, but it is prudent to do so Money held for a principal and someone else - client or office money? - CORRECT ANSWER-Client money What do you do if client gives you a cheque but asks you not to cash it until later - CORRECT ANSWER-- R12.3 don't pay it in because client has asked you not to - need to confirm this in writing. - BUT still record the receipt as under R29 you have still dealt with client money What do you do with a post-dated cheque - CORRECT ANSWER-- Doesn't count as 'money' until the date arrives - so not dealing with client money - no need to record atm - make usual entries when due date arrives What do you do with a cheque received in pursuance of CFA, containing mix of damages, fees and disbursements? - CORRECT ANSWER-R14.2(e) pay all into client account then transfer out money for fees and disbursements within 14 days Where to find rules re: client and office money - CORRECT ANSWER-Rule 12 Recording Receipts - basic entries - CORRECT ANSWER-Credit Client ledger (client or office section) Debit Cash ledger Making Payments - basic entries - CORRECT ANSWER-Debit Client ledger (client or office section) Credit Cash ledger Issue Bill - basic entries - CORRECT ANSWER-Debit Client ledger - office account Credit Profit Costs ledger Debit Client ledger - office account Credit HMRC ledger