Solicitors Accounts Flashcards
What is the principal method of payment when the invoice is addressed to the firm?
Payment must use business money as it is a firm’s expense.
What happens to the business side of the client’s ledger when a £600 payment is made?
It is debited by £600.
Where are the corresponding entries recorded for payments involving business money?
In the firm’s cash ledger and the VAT ledger.
What happens to the VAT (£120) on a payment addressed to the firm?
It is added to the total VAT charged when issuing the bill of costs to the client.
How can a solicitor record a re-mortgage transaction?
Option 1: Record on the borrower’s ledger, noting it is held for the lender.
Option 2: Open a separate ledger account for the lender and transfer the mortgage monies to the borrower’s ledger upon completion.
Are entries made on the HMRC (VAT) ledger when a client pays an invoice?
No, this ledger only records the sum owed by the solicitor to HMRC.
What is the method of payment for a disbursement from legal counsel?
Use the agency method, crossing out the firm’s name and replacing it with the client’s name.
From which account is a disbursement for legal counsel paid?
From client money, including VAT.
How are travel expenses treated in solicitor accounts?
They are a petty cash item, paid from the business account.
What happens to the client cash account during an inter-client transfer?
It is bypassed and remains untouched.
How is an inter-client transfer recorded?
As a transfer between client ledgers, with funds staying in the same bank account.
Are entries made on the HMRC (VAT) ledger when a client pays an invoice?
No, the HMRC ledger remains unaffected.
What happens to the client cash sheet during an inter-client transfer?
It is bypassed and remains untouched, with only client ledger entries adjusted.
