Solicitors account
REMEMBER
- ONLY TAKE MONEY OUT FROM CLIENT SIDE, IF THEY HAVE GIVEN MONEY FOR
COSTS.
- ALSO REMEMBER TO RE ADD THE VAT PAID WITH THE PROFIT COSTS AT THE END.
- CASH BALANCE BACK TO CLIENT = DR CLIENT SIDE AMOUNT TO RETURN, 0 BALANCE
CLIENT SIDE.
- Every transaction will be recorded twice, double entry system.
1. Benefits to firm/account (money comes in) = DR
2. Consideration out of/account (money leaves) = CR
There are 3 types of account:
a. Personal Accounts = for each individual, firm or company dealing with the
business. Name after the individual.
Personal Accounts (records indebtedness)
- DR – increase of amount owed to firm
- CR – reduction of amount owed to firm
- e.g. VAT charged = CR
- e.g. Client’s ledger - money in = CR
- e.g. Client’s ledger - money out = DR
- REDEEM DEPOSIT - DR
b. Real/Asset Accounts = something with a degree of permeance. Name it
after the asset.
- Examples = Cash, Motor cars, Premises , Library, Business Equipment
- Money/Asset IN (or benefit) = DR
- Money/Asset Out (consideration) = CR
- In details put cash
c. Nominal Income and Expense Accounts = This is based on the fees charged
in respect of work done for clients
*INCOME ACCOUNT = USUALLY KNOW AS THE PROFIT COSTS ACCOUNT
- DR – records extra expense
- CR – records extra income
e.g. Rent (Rent expense account)– payment = DR (benefit of electricity)
e.g. Profit costs charged = CR (consideration we have given out)
e.g. Wages – payment = DR
, e.g. stationary (expense – used up, credit)
When the firm charges a client + VAT
- Personal account = owed to the firm = DR(business only)
- Profit cost (business only) = owed to the firm = CR
- Personal account = VAT owed (20%) = DR (add to balance)
- Personal account HMRC = VAT = CR
e.g.
, When the client pays the bill
- Personal ledger = CR = make balance nil
- Cash account = receives money DR
REMEMBER
- ONLY TAKE MONEY OUT FROM CLIENT SIDE, IF THEY HAVE GIVEN MONEY FOR
COSTS.
- ALSO REMEMBER TO RE ADD THE VAT PAID WITH THE PROFIT COSTS AT THE END.
- CASH BALANCE BACK TO CLIENT = DR CLIENT SIDE AMOUNT TO RETURN, 0 BALANCE
CLIENT SIDE.
- Every transaction will be recorded twice, double entry system.
1. Benefits to firm/account (money comes in) = DR
2. Consideration out of/account (money leaves) = CR
There are 3 types of account:
a. Personal Accounts = for each individual, firm or company dealing with the
business. Name after the individual.
Personal Accounts (records indebtedness)
- DR – increase of amount owed to firm
- CR – reduction of amount owed to firm
- e.g. VAT charged = CR
- e.g. Client’s ledger - money in = CR
- e.g. Client’s ledger - money out = DR
- REDEEM DEPOSIT - DR
b. Real/Asset Accounts = something with a degree of permeance. Name it
after the asset.
- Examples = Cash, Motor cars, Premises , Library, Business Equipment
- Money/Asset IN (or benefit) = DR
- Money/Asset Out (consideration) = CR
- In details put cash
c. Nominal Income and Expense Accounts = This is based on the fees charged
in respect of work done for clients
*INCOME ACCOUNT = USUALLY KNOW AS THE PROFIT COSTS ACCOUNT
- DR – records extra expense
- CR – records extra income
e.g. Rent (Rent expense account)– payment = DR (benefit of electricity)
e.g. Profit costs charged = CR (consideration we have given out)
e.g. Wages – payment = DR
, e.g. stationary (expense – used up, credit)
When the firm charges a client + VAT
- Personal account = owed to the firm = DR(business only)
- Profit cost (business only) = owed to the firm = CR
- Personal account = VAT owed (20%) = DR (add to balance)
- Personal account HMRC = VAT = CR
e.g.
, When the client pays the bill
- Personal ledger = CR = make balance nil
- Cash account = receives money DR
