Transfers from client cash to business cash

Question 1

Overview and Rule 4.3

Answer 1

Once an invoice has been issued to a client Rule 4.3 says you may transfer money being held in client cash account for that purpose into the business cash account to settle the invoice

Question 2

Things to remember

Answer 2

The thing to remember when recording transfers from the client account to the business account is that it will require 2 sets of double ie. 4 separate entries

Question 3

What is actually happening?

Answer 3

The client cash account and the business cash account are 2 completely separate bank accounts.

Question 4

What needs to happen?

Answer 4

What needs to happen is that the amount to cover the bill needs to be withdrawn from the client cash account - which is one set of double entry (debiting the client side of the client ledger and crediting the client cash account). Then that amount needs to be paid into the business bank account - another set of double entry (being a debit in the business cash account and a credit in the business side of the client ledger)