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Review Your SQE 1 Practice Records

Examination Timing: 00H01M09S

Emma, a solicitor acting in a criminal defence case for a privately funded client, has paid the defence counsel's fee invoice from the business account due to insufficient funds in the client account. Emma has not yet delivered a bill to the client but requested payment over the phone to cover the counsel's fees. The client sends a cheque for the relevant amount. What should Emma do with this cheque?

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

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The cheque represents business money because it reimburses a disbursement already paid from the business account. According to the SRA Accounts Rules, money received to cover disbursements that have been paid is considered business money, even if a bill has not yet been delivered. Options A and B are incorrect as there is no requirement to deliver a bill before depositing the cheque into the business account. Option B also illustrates poor practice since cheques should be deposited promptly. Options D and E are incorrect because the cheque is not client money, and depositing it into the client account would violate the rules. 

Key Point: The SRA Accounts Rules distinguish between client money and business money. Reimbursement for disbursements paid from the business account is considered business money. Proper handling of these funds ensures compliance with regulatory standards and avoids ethical breaches.

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