Solicitors' Accounts

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How would you record a stakeholder deposit?: Credit client ledger with the description 'Client ledger: stakeholder (transfer of deposit on completion'
When you receive completion monies, what do you do first?: Move the stakeholder funds over with the description 'client ledger: stakeholder (transfer of deposit on completion)'
When transferring funds between different ledgers, what description do you use?: Client ledger: [transferee's name] (description)
When transferring money to pay for your bill of costs, what do you write?: 'Client/office cash (transfer to/from X ACCOUNT'
When splitting a payment from a client between office and client, what description should you write?: Write office cash or client cash respectively, then write in the description the split between office and client for record keeping purposes.
When the other side is going to pay your client's costs, what should you note in the description?: That fact, i.e. 'to be paid by other side'
When you receive a cheque from the other side in settlement (which covers your side's fees), what should you note in the description?: Payment from other side, by [means of payment]
When paying incidental expenses on behalf of your client which are plus VAT, how do you record the transaction in the ledger?: Include the without VAT figure and note in the description that VAT will need to charged to the client in due course.
If you're paying an invoice of a third party with the consent of your client and the invoice is inclusive of VAT, how should you write the description?: reference 'inclusive of VAT'.
When should you add to the client's ledger the VAT amounts that are to be 'paid in due course'?: You add after you issue your bill of costs (i.e. (1) bill of costs, (2) VAT on bill of costs and then (3) VAT that was listed above as payable in 'due course'.
What is the correct word to use when a bill of costs is reduced?: Abatement. For example, Abatement of costs or VAT on abatement of costs.
Do you write 'VAT to be paid in due course' in both your ledger descriptions and your bank account descriptions?: Yes!
When you pay VAT out which you have yet to bill the client for, how do you describe the transaction in the VAT account?: Simply 'Office cash (VAT on X)'
When you 'bill' a client for VAT (including VAT at the end that was to be charged in due course), how do you describe the entry in the VAT account?: Office ledger: [client name] (VAT on X, Y, Z)
Can you let your client's ledger balance fall into DR?: Yes
If a cheque bounces, what should you do in terms of ledger entries?: 1) DR the cheque as being 'dishonoured' - client ledger
2) DR office ledger (any amounts already paid) and CR client ledger that amount.
In general terms, if a cheque bounces, what should you do in what order?: 1. Flag the check as dishonoured
2. Transfer from office to cover costs
If you have to pay an amount that is plus VAT and you have money in client, can you take the money out of client funds?: No. Must use office funds when you're paying for something on which VAT is payable.
When you transfer the entries related to a bill of costs from a lender's office ledger to the borrower's office, ledger, do you need to keep the VAT and profit cost separated or can you merge?: You can merge the two.
What description should you use when transferring a lender's bill of costs to the borrower's office ledger?: Office Ledger: [Lender's name] (Bill to be paid by X)
If you transfer funds between different ledgers, what do you write: Reference rhe name of the other ledger save for when transferring costs between office and client ledgers of the same client.
In a firm of solicitors practising in partnership, who is responsible for compliance with the SRA Accounts Rules?: The partners and the compliance officer for finance and administration (COFA)
When dealing with payments that contain office and client cash, what options are available to you?: Under Rule 18.2, you must either split the payment or pay the whole amount into the client account.

Under Rule 17.1(c) or 18.3, the office money must be transferred to the office account within 14 days if the whole amount is paid into client account
Is acting as an agent the same as acting as a stakeholder?: No, the solicitor can make deposit monies available to a client on receipt if acting as agent, rather than stakeholder.
If you're holding a deposit as stakeholder and you receive completion monies, do you log the completion monies first or the deposit in the ledger?: Log the completion monies first then the move the deposit over.
On a normal client ledger, if you move funds to a separately designated client ledger, what description do you use on debiting the general client ledger?: Client cash (Transfer to separate designated client ledger).

Note: no name required.
When referencing client cash transactions in a separate designated client ledger, what descriptions do you use?: Write the name of the client followed by the words 'separate designated client cash' and then your description in brackets.
What must you remember to write at the top of your financial statement?: The name of your client and what the financial statement is regarding, for example:

Mr & Mrs Smith
Re: purchase of [property name]
After referencing the purchase price and any chattels included, what word do you use to "head" the multiple charges related to the purchase?: 'Add:'
What word do you use to "head" any deductions that you need to apply?: 'Less:'
Do you need to distinguish between funds received from your client and funds received from the lender?: Yes, do so as follows:

1) Received from you (inc. sub total):
2) Mortgage advance from [Lender's name]
What should you write at the end of your financial statement?: Balance due from you to complete on [date]
Where you have held off breaking out the VAT on the client's ledger, do you split out the VAT on your financial statement?: Yes. So for example you would split out VAT on things like 'Coal mining search' or 'Photocopying'
Where an item on your financial statement is inclusive of VAT, should you reference that fact on your financial statement?: Yes, simply write 'inclusive of VAT' on your statement.

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Created By shughes