The flashcards below were created by user
on FreezingBlue Flashcards.
If you receive a cheque made out to the client or to a third party what do you do?
You cannot pay this into the office account - the firm is not the payee. You must forward the cheque to the client/third party without delay. You have not dealt with client money because the cheque is not "money" and there is no obligation to record anything under rule 32.
You will want to keep a record on the correspondence file.
If you receive a cheque made out to the firm on behalf of the client what should you do?
You can endorse the cheque to the client or to the third party on behalf of the clinet (Rule 17(b)).
This is dealing with client money and must be recorded under Rule 32 and is dealing with client money.
It is common to make the entries for receipt and payment on the same line.
What should you do if you get given cash that is going to be paid 'without delay' to someone else?
You do not have to put it into the client account but this does count as dealing with client money and so you must record the receipt ad payment in the accounts.
What happens if there is a dishonoured cheque?
What should you do?
There may be a breach of rule 22 (taking the client account into deficit), you need to immediately transfer money from the office account to remedy this.
If the client complains that the bill is too high, how do you show this on the accounts?
- CR the office section of the client account with the amount of the abatement and the amount of vat.
- DR the profit costs account and the HMRC account on the office section
If you pay some money out of petty cash, how do you record this?
In the details column: Petty cash + reason
Then DR the OFFICE SECTION (even if client money is available) because petty cash is office money.
Where you act for the buyer and the lender and you recieve a mortgage advance, how do you show this on the accounts?
A separate leger does not need to be opened for the bank (Rule 32(6)) as long as it is an institutional lender which provides mortgages on standard terms in the normal course of their activities (e.g. banks and building societies) - otherwise a separate ledger will be necessary
However, these funds must be CLEARLY IDENTIFIABLE
This is what you write in the details column: Mortgage advance held for X Bank/Building Society
When it says that the client will pay the bank's costs for the mortgage advance by indemnity what do you do?
If it falls under the exception in 32(6) You just put the legal costs of the mortgage advance onto the client's ledger.
If not you simply transfer the debt from the lender's ledger to the client's