Intro to Solicitor's Accounts

Question 1

Who may maintain client accounts?

Answer 1

The branch of a bank or a building society

Question 2

How often are periodic statements and reconciliation required?

Answer 2

At least every 5 weeks

Question 3

When must an accounting report be received?

Answer 3

Within 6 months of the end of that accounting period

Question 4

When is an accounting report NOT required?

Answer 4

• If all the client money received is from the Legal Aid Agency
• The total balance of all client accounts does not exceed an average of £10,000 (max £250k)

Question 5

How long must accounting records be held?

Answer 5

At least 6 years

Question 6

When must client money be paid into the client account?

Answer 6

Promptly (Between day of receipt - 1 working day)

Question 7

When does client money NOT need to be held in the client account?

Answer 7

• The only client money held is for unpaid fees and disbursements
• Money held for disbursements for which the firm is liable
• The firm does not maintain a client account

Question 8

Bookkeeping Quiz: £100 received from the client in payment of sum owed to firm

Answer 8

Credit Client Ledger, Business Side £100

Debit Cash Sheet, Business Side £100

Question 9

Bookkeeping Quiz: £1,000 received from the client on account of costs

Answer 9

Credit Client Ledger, Client Side £1,000

Debit Cash Sheet, Client Side £1,000

Question 10

When can money be withdrawn from the client account?

Answer 10

Subject to exceptions:
- To be used for the purpose for which it is being held
- On the Client’s instruction
- With the SRA’s prior written authorisation

Question 11

Bookkeeping Quiz: Firm sends the client a bill for £300 Profit Costs and £60 VAT. Client has not yet paid.

Answer 11

Debit Client Ledger, Business Side £300
Credit Profit Costs ledger £300

Debit Client Ledger, Business Side £60
Credit HMRC ledger £60

Question 12

Bookkeeping Quiz: Client pays a £360 bill (£300 Profit Costs and £60 VAT).

Answer 12

Credit Client Ledger, Business Side £360
Debit Cash Sheet, Business Account £360

Question 13

Bookkeeping Quiz: Money in client account as an advance is transferred into business account

Answer 13

1. Remove money from client’s account:
   - Debit Client Ledger, Client Side
   - Credit Cash Sheet, Client Side
2. Add money to Business Account:
   - Debit Cash Sheet, Business Account
   - Credit Client Ledger, Business Account