SQE1 - Solicitors Qualifying Examination Part 1 Solicitors Accounts Rules Questions and Answers

Question 1

A solicitor receives a single electronic payment of £10,000 from a new client.
The client's instructions state that £8,000 is to be held on account for the purchase price in a conveyancing transaction, and £2,000 is for the firm's agreed fixed fee.
What is the correct procedure for handling this mixed receipt under the SRA Accounts Rules?

Accepted Answer

Pay the full £10,000 into the client account and then promptly transfer £2,000 to the business account.

Answer

Pay the full £10,000 into the business account and immediately transfer £8,000 to the client account.

Answer

Request the client to make two separate payments, one to the client account and one to the business account.

Answer

Pay £8,000 into the client account and £2,000 into the business account directly from the firm's holding account.

Question 2

Under which of the following circumstances is a withdrawal from a firm's client account permitted according to the SRA Accounts Rules?

Accepted Answer

To pay an expert's fee on behalf of a client, for which the money is specifically being held.

Answer

To provide a short-term loan to another client who has a temporary funding shortfall.

Answer

To pay the firm's quarterly VAT bill.

Answer

To purchase office stationery as the business account is overdrawn.

Question 3

A law firm concludes a matter and has £25 remaining in the client ledger. For 18 months, the firm has made reasonable, documented attempts to trace the client to return the funds, without success. According to the SRA Accounts Rules, what is the most appropriate action for the firm to take?

Accepted Answer

Pay the £25 to a registered charity of the firm's choice.

Answer

Transfer the £25 to the business account to cover the administration costs of the tracing attempts.

Answer

Keep the money in the client account indefinitely until the client makes contact.

Answer

Send a cheque for £25 to the Solicitors Regulation Authority.

Question 4

What is the overriding principle concerning the payment of interest on money held for a client in a general client account under the SRA Accounts Rules?

Accepted Answer

The firm must account to the client for a fair sum of interest.

Answer

The firm is entitled to keep all interest earned to cover bank charges.

Answer

Interest must always be paid at the official Bank of England base rate.

Answer

No interest needs to be paid unless the amount held exceeds £10,000.

Question 5

To comply with the SRA Accounts Rules, what is the maximum permitted interval between completing client account reconciliations?

Accepted Answer

At least every five weeks.

Answer

Every calendar month.

Answer

Every two weeks.

Answer

At least every quarter.

Question 6

Which of the following is explicitly defined as 'client money' under the SRA Accounts Rules?

Accepted Answer

Money received from a client on account of costs and unpaid disbursements, before a bill has been delivered.

Answer

A loan provided to the firm by one of its partners.

Answer

Money received from a client specifically for a bill that has already been delivered.

Answer

Money held by the firm to pay for its own general office running costs.