SOLICITORS ACCOUNTS PRACTICE EXAM 123|QUESTIONS WITH CORRECT ANSWERS

What is client money? CORRECT ANSWER Money received by you relating to regulated services by you to a client, on behalf of a 3rd party in relation to the regulated services If a client has not yet been billed but you receive money from them, which account does it go into? CORRECT ANSWER The client bank account Money coming INTO the firm for a client, is recorded how? CORRECT ANSWER As a CREDIT in their Credit ledger and DEBIT in the cash account Money LEAVING the firm, is owed to it by the client = how is it recorded? CORRECT ANSWER As a DEBIT in the ledger and CREDIT in cash account What does the profit costs ledger record? CORRECT ANSWER The issue and payments of bills for the firm's fees What does a HM Revenue and Customs or VAT ledger record? CORRECT ANSWER VAT due and received in respect of the firm's fees If the firm buys premises, it has less cash but what is recorded in the double entry bookkeeping? CORRECT ANSWER Less cash but has acquired an asset When the firm pays salaries, they have less cash but what is recorded? CORRECT ANSWER They have incurred an expense Where is charges for professional services recorded? CORRECT ANSWER As CR on income account - client's debt is recorded as a DR entry on an account in the name of the client