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Review Your SQE 1 Practice Records

Examination Timing: 00H01M20S

ou receive a cheque of £200 made out to your client, Mr. Anderson, in respect of a settlement agreement signed between Mr. Anderson and his tenant. 

Which of the following options best describes the correct accounting entries?

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You have chosen the incorrect answer.
Your selected option: A

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The correct answer is E. Since the cheque is payable to the client, Mr. Anderson, and not to your firm, you cannot pay the cheque into either the office account or the client account. It is neither client money nor office money, and thus no double entry should be made in this case. However, it is recommended to place a memorandum note in the client's ledger account to maintain a record of the transaction (note (iii) to Rule 29, Chapters 2 & 5).

  • Key Point: Cheques made payable directly to the client should not be recorded as client or office money. Instead, a memorandum note should be placed in the client's ledger to ensure proper record-keeping and transparency.

Option A is incorrect because the cheque is not client money that can be deposited into the client account.

Option B is incorrect because the cheque is not office money and should not be recorded as such.

Option C is incorrect because it misclassifies the nature of the cheque and its required entries.

Option D is incorrect because it incorrectly suggests the cheque is client money but cannot be deposited, which is not accurate.

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