Question 1

You should always use last year's budget or actual figures to estimate the coming year's budget. ​

Accepted Answer

While last year's budget or actual figures can provide a useful reference, they may not accurately reflect changes in circumstances, inflation, strategic priorities, or unexpected expenses. It's important to consider a variety of factors and adjust estimates accordingly for the coming year's budget.

Question 2

When drafting an income budget, such as estimating the number of billable hours a timekeeper will bill, it is recommended that you use a ____________________ estimate, because you do not want to overestimate income. ​

Accepted Answer

Using a conservative estimate ensures that you are not overstating your expected income, and therefore it is a more realistic approach to budgeting. A liberal estimate may lead to setting unrealistic goals and financial plans, which could result in financial difficulties later on. A total guess or recent year's estimate may not accurately reflect changes in the current economic climate or shifts in business operations.

Question 3

Law offices must return client funds back to a client __________________. ​

Accepted Answer

Law offices have a duty to promptly return client funds back to the client and provide a full accounting of the funds. Delaying or failing to return client funds can result in disciplinary action.

Question 4

A draw refers to partners receiving a monthly check as an anticipated share of profits. ​

Accepted Answer

A draw is a common way for partners in a business to receive a regular payment based on their anticipated share of profits, even if the actual profits for the period are not yet determined.

Question 5

When building a law office budget, the _________________________ adjusts downward the actual amount that will be billed to the client, taking into account the fact that timekeepers are not always able to bill at their optimum levels. ​

Accepted Answer

The answer of When building a law office budget, the...

Question 6

Which of the following statements is true? ​

Accepted Answer

Client funds must be deposited in the trust account to protect clients' money from being commingled with the lawyer's personal or business funds. Law office operating funds should never be deposited in the trust account.

Question 7

Whoever writes and signs the checks should always reconcile the bank account. ​

Accepted Answer

Separating the duties of writing and signing checks from reconciling the bank account is a key internal control to prevent fraud and errors, ensuring that no single individual has control over all aspects of financial transactions.

Question 8

If a law office receives client funds, the law office must have a ________________________________. ​

Accepted Answer

A law office that receives client funds must have a trust account, which is specifically designed to hold client funds separately from the law firm's general operating funds. This ensures that the funds remain safe and are only used for their intended purpose. Using a savings, checking, or money market account for client funds would not provide the necessary safeguards.

Question 9

The bookkeeper should always receive, deposit, and track all client payments him- or herself. ​

Accepted Answer

Segregation of duties is a key internal control principle that helps prevent fraud and errors, meaning tasks such as receiving, depositing, and tracking payments should be divided among different individuals.

Question 10

_______________ is what a firm actually receives in income as opposed to the amount it bills. ​

Accepted Answer

Realization is the amount of income a firm actually receives after deducting any adjustments, discounts, or write-offs from the billed amount. Income budget refers to the projected income for a specific period. Time-to-billing percentage is the percentage of time spent on billable work compared to non-billable activities. Staffing plan is a plan for determining the required number and type of employees for a specific project or period. None of these options describe what the firm actually receives in income.

Question 11

Lawyers may share fees with other professionals, such as CPAs. ​

Accepted Answer

Lawyers are generally prohibited from sharing their fees with non-lawyers, including other professionals such as CPAs, to maintain professional independence and avoid conflicts of interest.

Question 12

Match between columns
                        Premises: A mutual agreement to resolve a dispute on specified terms.

Accepted Answer

The Answer of staffing plan and zero-based budgeting system and is...

Question 13

When drafting an expense budget, such as estimating overhead expenses, it is recommended that you use a ______________ estimate, because you do not want to underestimate expenses. ​

Accepted Answer

A liberal estimate is recommended when drafting an expense budget because it is better to overestimate expenses than to underestimate them.

Question 14

Match between columns
                        Premises: Procedures that an organization establishes to set up checks and balances so that no individual in the organization has exclusive control over any part of the accounting system.

Accepted Answer

The Answer of staffing plan and time-to-billing percentage and budget is...

Question 15

When parties agree to resolve a case, it is called a(n)_____________________. ​

Accepted Answer

The answer of When parties agree to resolve a case,...

Question 16

Trust account funds can be used to _______________________. ​

Accepted Answer

Trust account funds can be used to pay the law office for fees that have been earned, as these funds are no longer considered client property once earned.

Question 17

Estimates of how many employees will be hired or funded by the firm, and their compensation levels, is referred to as a(n)________________. ​

Accepted Answer

The correct term for estimates of how many employees will be hired or funded by the firm, and their compensation levels, is a "staffing budget" or "payroll budget," which is not listed among the options provided. Therefore, the correct answer is E) none of the above.

Question 18

In addition to having a trust account, a law office must also ______________________________. ​

Accepted Answer

A law office must keep complete records of the trust account and be able to reconcile the trust account down to how much each client has in the account. This is why both options A and C are the correct choices. The other options (B and D) are not requirements for a law office to have in addition to a trust account.

Question 19

Law offices can protect client funds by having their accounting staff members ______________. ​

Accepted Answer

Bonding helps protect client funds in case of any financial misconduct or fraud by accounting staff members. Mug shots and fingerprinting are not relevant to protecting client funds.

Question 20

Match between columns
                        Premises: Estimate of how many employees will be hired or funded by the firm, what positions or capacities they will serve in, what positions will need to be added, what old positions will be deleted, and how much compensation each employee will receive.

Accepted Answer

The Answer of income budget and budget and Interest on is...

Quiz 6: Client Trust Funds and Law Office Accounting

You should always use last year's budget or actual figures to estimate the coming year's budget.

When drafting an income budget, such as estimating the number of billable hours a timekeeper will bill, it is recommended that you use a ____________________ estimate, because you do not want to overestimate income.

Law offices must return client funds back to a client __________________.

A draw refers to partners receiving a monthly check as an anticipated share of profits.

When building a law office budget, the _________________________ adjusts downward the actual amount that will be billed to the client, taking into account the fact that timekeepers are not always able to bill at their optimum levels.

Which of the following statements is true?

Whoever writes and signs the checks should always reconcile the bank account.

If a law office receives client funds, the law office must have a ________________________________.

The bookkeeper should always receive, deposit, and track all client payments him- or herself.

_______________ is what a firm actually receives in income as opposed to the amount it bills.

Lawyers may share fees with other professionals, such as CPAs.

Match the followings.

When drafting an expense budget, such as estimating overhead expenses, it is recommended that you use a ______________ estimate, because you do not want to underestimate expenses.

Match the followings.

When parties agree to resolve a case, it is called a(n) _____________________.

Trust account funds can be used to _______________________.

Estimates of how many employees will be hired or funded by the firm, and their compensation levels, is referred to as a(n) ________________.

In addition to having a trust account, a law office must also ______________________________.

Law offices can protect client funds by having their accounting staff members ______________.

Match the followings.

Quiz 6: Client Trust Funds and Law Office Accounting

You should always use last year's budget or actual figures to estimate the coming year's budget. ​

When drafting an income budget, such as estimating the number of billable hours a timekeeper will bill, it is recommended that you use a ____________________ estimate, because you do not want to overestimate income. ​

Law offices must return client funds back to a client __________________. ​

A draw refers to partners receiving a monthly check as an anticipated share of profits. ​

When building a law office budget, the _________________________ adjusts downward the actual amount that will be billed to the client, taking into account the fact that timekeepers are not always able to bill at their optimum levels. ​

Which of the following statements is true? ​

Whoever writes and signs the checks should always reconcile the bank account. ​

If a law office receives client funds, the law office must have a ________________________________. ​

The bookkeeper should always receive, deposit, and track all client payments him- or herself. ​

_______________ is what a firm actually receives in income as opposed to the amount it bills. ​

Lawyers may share fees with other professionals, such as CPAs. ​

Match the followings.

When drafting an expense budget, such as estimating overhead expenses, it is recommended that you use a ______________ estimate, because you do not want to underestimate expenses. ​

Match the followings.

When parties agree to resolve a case, it is called a(n) _____________________. ​

Trust account funds can be used to _______________________. ​

Estimates of how many employees will be hired or funded by the firm, and their compensation levels, is referred to as a(n) ________________. ​

In addition to having a trust account, a law office must also ______________________________. ​

Law offices can protect client funds by having their accounting staff members ______________. ​

Match the followings.

You should always use last year's budget or actual figures to estimate the coming year's budget.

When drafting an income budget, such as estimating the number of billable hours a timekeeper will bill, it is recommended that you use a ____________________ estimate, because you do not want to overestimate income.

Law offices must return client funds back to a client __________________.

A draw refers to partners receiving a monthly check as an anticipated share of profits.

When building a law office budget, the _________________________ adjusts downward the actual amount that will be billed to the client, taking into account the fact that timekeepers are not always able to bill at their optimum levels.

Which of the following statements is true?

Whoever writes and signs the checks should always reconcile the bank account.

If a law office receives client funds, the law office must have a ________________________________.

The bookkeeper should always receive, deposit, and track all client payments him- or herself.

_______________ is what a firm actually receives in income as opposed to the amount it bills.

Lawyers may share fees with other professionals, such as CPAs.

When drafting an expense budget, such as estimating overhead expenses, it is recommended that you use a ______________ estimate, because you do not want to underestimate expenses.

When parties agree to resolve a case, it is called a(n) _____________________.

Trust account funds can be used to _______________________.

Estimates of how many employees will be hired or funded by the firm, and their compensation levels, is referred to as a(n) ________________.

In addition to having a trust account, a law office must also ______________________________.

Law offices can protect client funds by having their accounting staff members ______________.