Double-Entry Bookkeeping Flashcards

1
Q

Rule 8.1 sets out the rules in relation to bookkeeping. What are those rules?

A

Firms must keep and maintain accurate, contemporaneous and chronological records to show dealings with client money

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2
Q

Where will entries for transactions involving client money be recorded?

A
  • Cash sheet client account (client account cash book)
  • client ledger client account
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3
Q

Where will entries be recorded for transactions involving non-client money?

A
  • cash sheet business account (business account cash book)
  • client ledger business account
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4
Q

What happens if a client has more than one matter running at the same time?

A

Different client ledgers will need to be maintained for each of the ledgers

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5
Q

What does the SRA guidance say about keeping accurate client accounting records?

A
  • accounts should be maintained on the double-entry principle
  • current balance on client ledger should be readily ascertainable
  • entries should be made in chronological order
  • ledger accounts should include the name of client and contain description of matter/transaction
  • business account entries in relation to each client should be kept up to date as well
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6
Q

What does the double entry principle mean?

A

For every transaction, there will be two entries for the same amount in the accounts.

One should be a credit and one should be a debit

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7
Q

What will the balance on the client ledger show?

A

Will show how much money in the client account belongs to that individual client

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8
Q

What will the balance on the client cash book records show?

A

How much money the firm holds in the client accounts for all clients (balance should equal total of all client ledgers)

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9
Q

What will balance on the business side of the client ledger show?

A

How much money a client owes the firm

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10
Q

How often must firms obtain bank account statements?

A

At least every 5 weeks

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11
Q

How often must firms complete reconciliations?

A

At least every 5 weeks

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12
Q

What is the purpose of the reconciliations?

A

Make sure the money held on accounts matches the balances of the cash book and the client ledger total

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13
Q

What pair of entries is required for client money received by a client?

A
  • credit the client ledger client account
  • debit the cash sheet client account
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14
Q

What pair of entries is required for client money being paid out?

A
  • debit the client ledger client account
  • credit the cash sheet client account
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15
Q

What pair of entries is required for non-client money received?

A
  • credit the client ledger business account
  • debit the cash sheet business account
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16
Q

What pair of entries is required for non-client money being paid out?

A
  • debit the client ledger business account
  • credit the cash sheet business account
17
Q

What pair of entries is required for money paid out from petty cash?

A
  • debit the client ledger business account
  • credit the cash sheet petty cash
18
Q

What entries are required for a transfer from client account to business account?

A

Step One

  • debit the client ledger client account
  • credit cash sheet client account

Step two

  • credit the client ledger business account
  • debit the cash sheet business account
19
Q

What entries are required for a transfer from business account to client account?

A

Step one

  • debit the client ledger business account
  • credit the cash sheet business account

Step two

  • credit the client ledger client account
  • debit the cash sheet client account
20
Q

What entries are required for splitting a payment that involves a mix of client and non-client money?

A

Step one

  • credit client ledger client account
  • debit the cash sheet client account

Step two

  • credit client ledger business account
  • debit cash sheet business account
21
Q

What entries are required for a transfer between two clients?

A
  • debit client ledger client account for client transferring money
  • credit client ledger client account for client who is receiving the money