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Solicitors Accounts > Double entry book keepin > Flashcards

Double entry book keepin Flashcards

1
Q

Debit

A

left, gain

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2
Q

credit

A

right, loss

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3
Q

what to put in details

A

description of matter and cross reference the other account

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4
Q

how to record balance

A

DR balance if DR entries exceed CR and vice versa

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5
Q

how to record a bill issued

A

CR entry on income account (often called profit costs)

DR entry on client account (debt owed by client)

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6
Q

how to record payment of bill

A

receipt of cash
loss of debt
no entry on profit costs account (profit costs account only record bill issued. it does not show if the client has paid the bill)

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7
Q

what does the cash account record

A

payments in and out of the bank account

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8
Q

other names for the cash account

A

cash sheet or cash book

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9
Q

what entries can be seen in the petty cash account

A

record periodic receipts of cash from bank and payments made from petty cash

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10
Q

which accounts are not included in the ledger account

A

cash book and sometimes petty cash account

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11
Q

how many client ledgers will there be

A

Two - a client ledger for client account and a client ledger for firm account. these are often combined

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12
Q

how many cash accounts will there be

A

there must be one for client money and there is often one for firm money too. these are often combined.

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13
Q

how to record receipts of money

A

identify if it is client money or firm money
DR cash account (client side if client money and firm side if firm money)
CR client ledger (client side if client money and firm side if firm money)

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14
Q

how to record payment of money

A

CR cash account (client side if client money being used and firm side if firm money used)
DR client ledger (client side if client money and firm side if firm money)

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15
Q

how to record the firms professional charges / issue of bill

A

issue of bill:
DR client ledger professional charges (business section- because business pays until client meets costs)
DR client ledger VAT (business section- because business pays until client meets costs)
CR income ledger / profit costs
CR HMRC

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16
Q

other names for income ledger

A

profit costs, professional charges, professional fees

17
Q

how to record disbursements

A

record as and when they are paid. don’t record the issue of a bill for disbursements.

18
Q

is it client money or firm money when money is received in payment of professional charges for which a bill has been issued and for paid or unpaid disbursements for which a bill has been issued

A

firm money - pay into firm bank account

19
Q

how to record cash transfer when money is withdrawn from client bank account and paid into business bank account

A

CR cash account (client section)
DR client ledger (client section)
DR cash account (business section)
CR client ledger (business section)

20
Q

how to record inter-client transfers (aka paper transfers)

A

DR client ledger of client who money was originally held for (client section)
CR client ledger of client who money is now held for (client section)

21
Q

how to record mixed receipts - split cheque

A

DR business portion to cash account business section
DR client portion to cash account client section
CR business portion to client ledger business section
CR client portion to client ledger client section

22
Q

how to record mixed receipts - pay whole amount into client account then transfer business portion to business account

A

DR whole amount to cash account client section
CR whole amount to client ledger client section
CR firm portion from cash account client section
DR form portion from client ledger client section
DR firm portion cash account business section
CR firm portion client ledger business section

23
Q

what special account entries use ‘different rules’ (use the original basic rules of CR loss and DR gain)

A 
bad debts
petty cash (cash into PC, payment for item out of PC and payment for client out of PC)
agents professional charges
24
Q

how to record a payment from bank account into petty cash

A

CR cash account business section

DR petty cash account

25
Q

how to record a payment for items out of petty cash

A

CR petty cash account

DR appropriate ledger eg sundries

26
Q

how to record payment for client out of petty cash

A

CR entry petty cash

DR client ledger business section

27
Q

how to record payment to agent

A 
Agents professional charges:
CR cash account business section
DR agency expenses account business section
Agent VAT:
CR cash account business section
DR HMRC account business section
Agent disbursements:
CR Cash account business section 
DR client ledger account business section
28
Q

how many elements are to be recorded when recording payment to agent

A

agents professional charges
agents VAT
agents disbursements

29
Q

how to record commission from insurance companies

A

commission received account and a ledger account in the name of the insurance company

30
Q

how to record a client who is a law firm

A

when a law firm uses another law firm as their agent there is a client ledger in the name of the instructing law firm and they are recorded like any other client.

31
Q

if a law firm uses another law firm as their agent is the cost of the agent law firm recorded as a disbursement

A

no - it is an expense of the instructing firm who charge more to cover this expense.

32
Q

when a law firm uses another law firm as their agent are disbursements recorded as normal? does it matter if the instructing law firm or agent law firm pays the disbursement

A

record disbursements as normal as and when they are paid. it doesn’t matter if the instructing law firm or agency law firm pays it.

33
Q

how to record bad debts

A 
CR client ledger account business section
DR bad debt account
record refund from HMRC:
CR bad debt account with amount of VAT
DR HMRC Account with amount of VAT
34
Q

when is VAT relief available on a bad debt

A

when it has been outstanding for at least 6 months since payment was due.

35
Q

if a firm receives a cheque made out to the client or a third party should it be paid into the firm bank account

A

no send it straight to client or third party

36
Q

can you draw against a cheque that hasn’t cleared yet

A

yes but if it bounces you have breached the rules for drawing more than you hold and will have to make good the shortfall

37
Q

what is abatement

A

when firm reduces costs following complaint from client

38
Q

how to record abatement

A

reverse entries on profit costs, HMRC and client ledger accounts to the extent of the abatement.
Send a VAT credit note to the client.

Solicitors Accounts (3 decks)

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