Accounting Rules

Question 1

When the law firm receives a payment for a cheque

Answer 1

Debit cash ledger (CM/BM), credit client ledger (CM/BM)

Question 2

When the cheque bounces

Answer 2

Debit client ledger (CM), credit cash ledger (CM)

Question 3

When petty cash is used

Answer 3

Debit client ledger (BM), credit petty cash ledger (BM)

Question 4

When there is an inter-client transfer

Answer 4

Debit sender’s ledger (CM), credit recipient’s ledger (CM)

Question 5

When a deposit is made to the seller

Answer 5

Debit cash ledger (CM), credit stakeholder ledger (CM)

Question 6

When a transaction is completed (property)

Answer 6

Debit stakeholder ledger (CM), credit client ledger (CM)

Question 7

When a firm issues their bill

Answer 7

Debit client ledger (BM), credit HMRC ledger and profit costs ledger (BM)

Question 8

When a client pays the bill

Answer 8

Debit cash ledger (BM), credit client ledger (BM)

Question 9

Where a client successfully disputes a bill

Answer 9

Debit THE AMOUNT OF REDUCTION to the HMRC ledger and profit cost ledger (BM), credit the client ledger (BM)

Question 10

When a firm pays a client’s invoice

Answer 10

Debit client ledger (BM/CM), credit cash ledger (BM/CM)