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SAFLK2 · 8 topics

SQE1 Solicitors Accounts.

Client money and accounts rules.

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All 8 topics in Solicitors Accounts

SRA-aligned
  1. 01

    Introduction to Solicitors Accounts

    Core principles, double entry bookkeeping, SRA Accounts Rules overview

    Free
  2. 02

    Client Money

    Definition, payment into client account, withholding, repayment, accounting entries

  3. 03

    Client Account Operations

    Meaning of client account, no banking facilities, withdrawals, accounting entries

  4. 04

    Interest on Client Money

    Requirement to pay interest, accounting entries, exceptions

  5. 05

    Breaches of the SRA Accounts Rules

    Identifying breaches, duty to correct, accounting entries, reporting

  6. 06

    Records, Ledgers and Reconciliation

    Client ledgers, reconciliation, bills, disbursements, transfers, VAT

  7. 07

    Joint Accounts and Third-Party Accounts

    Operation of joint accounts, client's own account, third-party managed accounts

  8. 08

    Accountants' Reports and Record Retention

    Obtaining accountants' reports, delivery, storage, retention of accounting records

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4 sample SA questions

Real SBA questions from the Solicitors Accounts bank, with the full explanation. The paid bank covers all 8 topics and difficulty levels.

Sarah is a trainee solicitor at Jenkins & Co, a high street firm. She has just received a cheque for £5,000 from a client for her conveyancing matter. Sarah's supervisor explains that this money must be paid into a specific bank account and that the firm's own money must never be mixed with client funds. The supervisor emphasises that this separation is a fundamental requirement of the SRA Accounts Rules.

Which of the following statements correctly describes the fundamental principle of separation of client money and office money in solicitors accounts?

  1. Client money must be paid into the client account and office money must be paid into the office account, and these two must never be mixed Correct
  2. Client money and office money may be held in the same account provided they are clearly recorded in separate ledgers
  3. Client money may be paid into the office account temporarily before being transferred to the client account within five working days
  4. Client money and office money can be mixed provided the firm maintains a reserve equal to the total client funds held
  5. Client money should be paid into the office account and only transferred to client account when required for a specific transaction
Why: The correct answer is A. The fundamental principle of solicitors accounts is that client money and office money must be kept completely separate. Client money goes into the client account, office money goes into the office account, and these two must never be mixed. This separation protects client funds and ensures they can always be identified and returned. B is incorrect because client and office money must be in separate bank accounts, not just separate ledgers. C is incorrect because client money must be paid directly into the client account promptly, not held temporarily in the office account. D is incorrect because maintaining a reserve does not justify mixing client and office funds - the accounts must be separate. E is incorrect because client money should go directly to the client account, not the office account.

James is a solicitor who runs a small practice. He is reviewing his firm's accounts procedures and wants to ensure compliance with the SRA Accounts Rules. He knows that reconciliation is important but is unsure about the specific frequency required. He checks the SRA Accounts Rules to confirm the reconciliation requirements for his firm's client account.

Which of the following statements correctly describes the SRA requirement for reconciling client accounts?

  1. Reconciliation must be carried out weekly when client money is being held, but can be done monthly when no client funds are held
  2. Reconciliation must be carried out at least once every three months regardless of whether any transactions have occurred
  3. Reconciliation must be carried out at least once each month, even if no transactions occurred during that month Correct
  4. Reconciliation is required only when the firm holds more than £10,000 in client funds or has more than five active matters
  5. Reconciliation must be carried out annually as part of the firm's accountant's report, with no requirement for monthly checks
Why: The correct answer is C. The SRA Accounts Rules require that client accounts be reconciled at least once each month. This monthly reconciliation must be carried out even if no transactions occurred during that month. The purpose is to verify that accounting records match bank statements and to identify any discrepancies promptly. A is incorrect because reconciliation is required monthly regardless of whether client money is being held. B is incorrect because the requirement is monthly, not quarterly. D is incorrect because reconciliation is required for all firms that handle client money, regardless of the amount held or number of matters. E is incorrect because monthly reconciliation is a regulatory requirement, not just an annual check.

The SRA has conducted an investigation into a solicitor's firm following a routine accountant's report. The investigation found that the firm had been using client money to pay office expenses without proper authority. The solicitor argues that the money was always paid back and no client suffered any loss. The SRA is considering what action to take.

Which of the following statements correctly describes the consequence of a serious breach of the SRA Accounts Rules?

  1. The SRA will take no action because no client suffered any actual loss and all money was repaid
  2. The SRA may issue a warning but cannot take disciplinary action because the breaches were technical rather than dishonest
  3. The SRA can refer the matter to the Solicitors Disciplinary Tribunal, which has power to fine, suspend, or strike off the solicitor
  4. The SRA can only require the firm to improve its procedures and undergo additional training, with no power to impose penalties Correct
  5. The SRA must first give the firm a written warning and can only refer to the tribunal if a second breach occurs within five years
Why: The correct answer is D. The SRA can take disciplinary action for breaches of the Accounts Rules, including referring the matter to the Solicitors Disciplinary Tribunal. The SDT has power to impose fines, suspend solicitors, or strike them off the roll. The fact that money was repaid does not prevent disciplinary action - the breach itself is serious. A is incorrect because the lack of actual loss does not prevent disciplinary action; the breach itself matters. B is incorrect because the SRA can and does take disciplinary action for technical breaches. C is incorrect because the SDT does have power to impose significant penalties for Accounts Rules breaches. E is incorrect because there is no requirement for a written warning before referral - serious breaches can be referred immediately.

Fatima is setting up the accounting records for a new solicitor's firm. She is establishing the cash book, which will be the central record of all bank transactions. She wants to ensure the cash book is set up correctly and includes all necessary information to comply with the SRA Accounts Rules.

Which of the following statements correctly describes the proper use of the cash book in solicitors accounts?

  1. The cash book should record all bank transactions in date order, with separate columns for client bank receipts/payments and office bank receipts/payments
  2. The cash book should only record client bank transactions, as office transactions are recorded separately in the office ledger
  3. The cash book should be updated weekly, with all transactions for the week entered as a single summary total
  4. The cash book should record transactions in alphabetical order by client name to make client ledger reconciliation easier
  5. The cash book should record only payments out of the bank, as receipts are recorded directly in the client ledgers Correct
Why: The correct answer is E. The cash book is the central record of all bank transactions and should record every receipt into and payment from both the client and office bank accounts in date order. It should have separate columns for client bank receipts, client bank payments, office bank receipts, and office bank payments. This structure enables monthly reconciliation and proper accounting. A is incorrect because the cash book must record both client and office bank transactions. B is incorrect because transactions should be recorded promptly individually, not as weekly summaries. C is incorrect because transactions should be recorded in date order, not alphabetical order by client. D is incorrect because both receipts AND payments must be recorded in the cash book.
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Common questions

Solicitors Accounts FAQs

Client money and accounts rules. The SRA assessment specification breaks Solicitors Accounts into 8 topics, each examined through single-best-answer (SBA) questions in the FLK2 paper.
Solicitors Accounts sits in FLK2. Both FLK2 papers are 180 single-best-answer questions in two 2h 5m sittings on the same day.
8. Our notes, flashcards, and question bank are mapped one-to-one against the SRA's SA specification so nothing is missed.
Most candidates allocate roughly 24–40 hours across notes, flashcards, and timed practice. The exact split depends on your background — re-sitters can usually focus on weak topics rather than re-reading.
Active recall beats re-reading. Read the notes once, then practise SBA questions in mixed order, then revisit weak topics. Our weak-area tracker surfaces the topics where your accuracy is below 70%.
Yes. The free readiness quiz includes a sample from every subject, and free accounts can access sample questions across all subjects. The full SA question bank is unlocked with any paid plan (1, 6, or 12 months) and is covered by the 14-day money-back guarantee.
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