1. Foundations of Solicitors Accounts Flashcards
What are the SRA Account Rules?
The SRA account rules govern how law firms must run their accounts, and how to look after clients’ money.
How many SRA Account Rules are there?
13
What the Dual System of Accounting and why do firms have it?
Rule 41 requires law firms’ money is kept separate to clients money.
Therefore law firms must have a dual accounting system and separate bank accounts for their clients.
What is client money?
Client money is any money that belongs to a client or third party rather than the firm.
It must be kept in a client bank account.
What is double entry book keeping?
In each transaction, there is a debit and credit entry (the double entry) in two different ledgers (the books.) These entires balance each other out (balancing the books)
What are ledgers?
A Ledger is a record of financial transactions.
What are the collums in a ledger?
One is a debt entry (good for the business)
One is a Credit Entry (Bad for the business)
One is the balance
What are the two types of ledgers?
- Ledgers with business columns only
- Ledgers with business and client columns
Give 2 examples of Ledgers with both business and client columns.
The cash sheet (Which records payment and receipts of both business and client money
Client ledgers that are specific to individual clients and their legal matters
What would an entry in the clients credit balance column indicate?
An entry in the clients credit balance collum would indicate that the account is overdrawn, which is a breach of the rules.
What is a journal entry?
Journal entries are a description or summary of accounting entries made in a firm’s Ledger. They are used as a quick way of explaining what double entries are required in which of the firm’s ledgers for any financial transaction.
For the SQE you need to know:
- Which two ledgers should the double entries appear? (either both client and business accounts, or just business accounts)
- Is the transaction relating to client or business money?
- Is the entry a debit or credit entry?
What are the 13 SRA Account Rules?
