Chapter 2 Flashcards
(15 cards)
Client money received?
CR Client ledger
DR Client cash (i.e. the client account)
Client money withdrawn?
DR Client ledger
CR Client cash
What needs to go into the ‘details’ section of the ledger?
Where the double entry will be made
Where do you record invoices issued to clients?
Profit costs
What typeof entries are profit costs?
ALWAYS office sided
Transfer money from client account to office account (e.g. to settle a bill of costs)
DR Client ledger
CR Client cash
CR Office ledger
DR Office cash
What is the two stage process for transferring money form a client account to the office account?
Money must be taken out of the client account
Money must be recorded as a receipt in the office ledger
What type of ledger is a profit costs ledger?
Non- cash
A list of all the invoices that the firm has delivered
Payment of money by the solicitor to the client?
DR Client ledger
CR Client cash
How should disbursements be treated?
Paid out of client account if there is enough money in client account
Not enough money- pay out of office account and reclaim from client later
If VAT is required on payment, MUST be paid out of office account
When should disbursements be recorded?
When they are actually paid
OR
When they are incurred (if this is earlier than when they are paid)
When should professional disbursements be recorded?
When they are actually paid ONLY
What are the two ways in which a mixed payment can be treated?
Pay the whole amount into client and transfer the amount owed to office within 14 days
Split the money and pay the client money and office money directly to the correct ledgers
Where is petty cash recored?
Separate ledger
Initial entry shows money going in from office ledger
Subsequent entries show disbursements
Why would you use a capital ledger?
For partner money
