Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Paralegal Licenscing Exam > Accounting, bank accounts and bookkeeping > Flashcards

Accounting, bank accounts and bookkeeping Flashcards

1
Q

What are the kinds of accounting systems?

A

1/ manual double entry
2/ one write
3/ spreadsheet software
4/ general accounting software
5/legal accounting software

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

When are paralegals prohibited from operating a trust account?

A

When providing legal services through a CSO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Money deposited in the general account belongs to

A

the paralegal/the firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what are source documents?

A

Records of the financial transaction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

when must paralegals register with the CRA?

A

If the reveue from the legal services practice exceeds a certain amount.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

When a paralegal has received a money retainer from the client and has billed the client for the HST-eligible services, the HST should be

A

removed from trust and deposited to the general account or another account belonging to the paralegal/firm until the paralegal is required to remit it to the CRA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

When opening a trust account, paralegals must ensure:

A
  • the trust account is named and designated as a trust account, as indicated clearly on all statements and cheques for the account
  • the account is in the paralegal’s name/firm name
  • the financial institution provides the appropriate source documents for the account
  • the financial institution returns cancelled trust account cheques or electronic images of cancelled cheques to meet the record keeping requirements of Bylaw 9
  • the financial institution will not withdraw money from the trust account unless authorized by the paralegal in respect of interest earned on trust, including services fees to operate the trust account.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is a mixed trust account?

A

An account where funds belonging to different clients are pooled.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the requirements for mixed trust accounts?

A
  • the interest earned on a mixed trust account must be remitted by the financial institution to the Law Foundation of Ontario (LFO) for the benefit of various law-related organizations and projects
  • the mixed trust account must bear interest at a rate approved by the trustees of the LFO
  • Paralegals must provide their financial institution with a letter of direction authorizing them to forward the interest to the LFO
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What if a client wishes to receive the interest earned on their funds?

A

The client must instruct the paralegal to open a separate interest bearing trust account for their funds. Must be discussed as part of the paralegal’s fiducary obligations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

If paralegal receives instruction to open a separate interest bearing account, they should:

A
  • obtain the client’s social insurance number or business number
  • discuss with the client how the interest is to be allocated for income tax purposes since the paralegal will receive a T5 supplementary income slip from the financial institution for the interest earned
  • check with the financial institution as to how much notice is required to have the funds released and whether earlier redemption will affect the interest paid
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

A paralegal may only operate a trust account…

A

in their own name/name of the firm where they are employed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Sole practitioners may not

A

share trust accounts with other licensees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Paralegals must deposit into a trut account:

A
  • money provided by client to secure legal services as a deposit for the fees thatwill e charged for those services (retainer)
  • money for payment of disbursements that will be incurred on behalf of the client by the paralegal
  • money to be held by the paralegal pending the client’s instruction
  • settlement funds that belong to the paralegal’s client that are received by the paralegal from another party in the matter
  • settlement funds that belong to another party in a matter that are received by the paralegal from the client
  • any money that is shared by paralegal and client where it is not practical to split the payment, and
  • any funds withdrawn from the trust account in error.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Paralegals are not required to deposit into a mixed trust account funds from client IF:

A
  • client requests in writing that the paralegal not deposit the money to the mixed trust, but to a separate interest bearing account
  • paralegal deposits the money into an account kept in the name of the client, a person named by the client, or an agent of the client
  • immediately upon receiving it, the paralegal pays the money to the client or to a person on behalf of the client, following normal business practices.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Atms may only be used for..

A

deposits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Once a paralegal receives trust funds, the paralegal must

A

deposit them into a trust account by the end of the next banking day

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

A paralegal must not withdraw more money from the trust account than

A

is being held in trust for that specific client

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

A paralegal must only withdraw from trust:

A
  • money required to pay a client or a person on behalf of a client
  • money required to reimburse the paralegal for money spent or expenses incurred on behalf of the client
  • money required to pay the paralegal for fees for services that the paralegal has performed and for which a bill has been delivered
  • money that is directly transferred into another trust account and held on behalf of the client; and
  • money that does not belong in the trust account but was deposited to trust in error
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are the methods of withdrawal from trust?

A
  • by cheque, IF signed by the paralegal or another licensee authorized
  • by transfer to the general account, authorized in writing per bylaw 9
  • by electronic transfer per bylaw 9
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

When using an online etransfer, paralegals must complete

A

Form 9A for their records, electronic trust transfer requisition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

where a paralegal has money in trust for a client for at least 2 years, the paralegal may apply to have these unclaimed trust funds transferred to the Law Society’s Unclaimed Trust Fund if:

A
  • despite reasonable attempts to locate the client throughout the period of two years, the paralegal cannot find the client to whom the funds belong; or
  • the paralegal does not know to whom the funds belong
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

A paralegal must not receive or accept cash in an aggregate amount of more than

A

$7,500 Canadian

24
Q

The exception to the cash rule applies if the cash is received

A
  • for fees or disbursements (incl. retainers), or expenses, provided that any refund out of such receipts is also made in cash
  • to pay a fine, penalty or bail
  • from a peace officer, law enforcement agency, or other agent of the Crown acting in an official capacity, or
  • from a public body, authorized foreign bank, credit union, financial services bodty
25
Q

For cash refunds, paralegal must withdraw funds from the general account or trust account by:

A
  • completing a withdrawal slip at the financial institution for the general or trust account, and refunding the cash to the client, or
  • issuing a general or trust cheque payable to the paralegal, noting the file number and that it is a cash withdrawal, cashing the cheque, and refunding the cash to the client
26
Q

The simplest method to refund a client in cash is

A

using a withdrawal slip

27
Q

Payments for future fees and disbursements must be deposited into

A

the trust account

28
Q

payment for services rendered for which a fee invoice has been sent to the client must be deposited to

A

the general account

29
Q

All merchant discounts and service charges associated with accepting credit and debit card payments are charged to

A

the general account

30
Q

If paralegals wish to accept client credit and debit card payments for both money retainers and bills, they must

A

have two point of sales systems/machines: one for trust deposits and one for general. Deposits cannot be made into one account and then diverted, they must be directly deposited into the intended account

31
Q

Clearance period refers to

A

the period of time it takes for funds to actually be available for use. Usually set by the financial institution. Standard clearance period for an uncertified personal cheque is from 5-10 business days. Certified cheques and deposits are usually cleared immediately

32
Q

Part V of Bylaw 9 outlines

A

the minimum requirements for books and records to be maintained by licensees

33
Q

For the general account, paralegals must keep:

A
  • a general receipts journal
  • a general disbursements journal
  • a fees book or file of client billings, and
  • source documents for the above
34
Q

the general receipts and general disbursements journal may be referred to as:

A

the general bank journal

35
Q

General receipts journal (6 years)

A

must record:
- date money was received
- method money was received
- amount of money received
- person from whom money was received

36
Q

General disbursements journal (6 years)

A
  • date payment made
  • method used
  • reference number of the payment method (cheque #, internet banking reference no, money order no.)
  • amt of payment
  • person to whom the payment was made
37
Q

Fees book (6 years)

A
  • amount of fees charged to the client
  • amount of other billings to the client (disbursements, HST)
  • date of billings
  • name of the client who was billed
38
Q

Clients general ledger

A

option to keep. Tracks all expenses, invoices, payments relating to each client. The balance of this ledger shows the amount of money that the client owes the paralegal

39
Q

Monthly general reconciliation

A

optional to keep

involves checking all entries in the general account statement against the general account source documents, books, and records to ensure that they match.

40
Q

For the trust account, a paralegal must keep:

A
  • trust receipts journal
  • trust disbursements journal
  • a client’s trust ledger, with individual client accounts
  • a trust transfer record
  • monthly trust comparisons
  • trust account source documents
41
Q

All trust records must be kept for

A

a period of 10 years, meaning the current year plus the 10 previous calendar years.

42
Q

Trust receipts journal (10 years)

A

The paralegal must record:
- the date money was received
- method by which money was received
- person or institution from whom money was received
- amount of money received
- name of the client for whom money was received
- reason the money was received in trust

43
Q

Trust disbursements journal (10 years)

A
  • date payment was made
  • method used to make the payment
  • reference no.
  • amount of payment
  • person to whom payment was made
  • name of the client on whose behalf payment was made\
  • reason the money was paid from trust
44
Q

Clients’ trust ledger (10 years)

A
  • must track individual client trusts separately, so paralegal does not spend more money than is available on a particular clients behalf
45
Q

Trust transfer record (6 years)

A

record of money transferred between clients’ trust ledger accounts and the reason for the transfer.

46
Q

Monthly trust comparison (10 years)

A

required record, shows a detailed listing that shows how much money is held in trust for each client and a detailed monthly reconciliation of each trust account.

Compares:
- the reconciled trust bank balance
- the client trust listing total

47
Q

What is trust reconciliation?

A

A way to ensure the amount of money held in trust according to the trust account statements from the bank agrees with the amt recorded in the paralegal’s books and records.

Check the financial institution monthly balance with paralegal’s own records

48
Q

To complete the trust reconcilation, the paralegal must:

A

1/ check off all returned or imaged cheques against the trust bank statement for the previous month, noting any discrepancies in amts

2/ from the trust deposit book, check off all deposits on the trust bank statement against the duplicate deposit slips or confirmations, noting any discrepancies in the amounts

3/ from the trust disbursements journal, identify any cheques that were issued that have not yet cleared the bank

4/ list oustanding cheques by cheque no., issue date, payee and amount, and total the amounts

5/ List any deposits for the previous month, by date and amt, that are not recorded on the trust bank statement, these are oustanding deposits

6/ list any errors individualy by date of occurence, w explanation and date of correction, copy of supporting documentation should be attached to reconciliation

7/ from the ending balance on the trust bank account statement, SUBTRACT the amt of outstanding deposits, and adjust for any bank and posting errors to calculate the reconciled trust bank balance

49
Q

What is the client trust listing?

A

a monthly list of all clients for whom the paralegal or firm holds money in trust, and the amount of funds held for each client at the previous month end.

50
Q

To complete the client trust listing, the paralegal must:

A
  • from the client’s trust ledger, identify any client from whom trust funds were held at the previous month end
  • list the client names in logical order, with the unexpended trust balance for each client as at the previous month end
  • include the last activity date for each client’s trust balance n the client trust listing to help monitor inactive or dormant amounts
  • total the client trust listing
51
Q

The monthly trust comparison must be completed by

A

the 25th of the following month.

52
Q

Source documents for both the general and trust accounts must be kept for

A

10 years

53
Q

Duplicate cash receipts book must be kept for_______ and must contain______

A

6 years

  • date cash was received
  • name of the person who gave the cash
  • amt of cash received
  • name of the clients for whom the cash was received
  • file number, if any
  • paralegal’s signature or that of an authorized designate
  • signature of the person who gave the cash
54
Q

Records of referral fees must be kept for _______ and must include______

A

6 years

  • all referral fees received or paid
  • date referral fee was received/paid
  • method fee was received/paid
  • reference number of the payment method
  • amt of fee
  • licensee to whom the referral fee is paid
  • name of the client/matter for whom the referral fee was received or paid
55
Q

Paralegals are required to keep a record of all negotiable or valuable property held in trust, for

A

10 years

56
Q

The valuable property record should include

A
  • all property other than money, held in trust
  • describe each property and the date that the paralegal/firm took possession
  • indicate who had possession of the property immediately before the paralegal took possession
  • show the value of the property
  • indicate the client for whom it is being held
  • show the date each property is given away and to whom

Paralegal Licenscing Exam (51 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions