Picture this. You are 140 questions into FLK2, the clock is bleeding away, and a question drops a tidy little fact pattern on you: a client pays £10,000 on account of costs, the firm has not yet billed, and somewhere in the answer options there is a debit, a credit, and a date that may or may not breach the rules. Your stomach tightens. Solicitor Accounts has a reputation, and it is mostly deserved — but it is also one of the most scoreable topics in the whole SQE1, because the rules are finite and the logic repeats.
I have watched candidates lose easy marks here for years, almost always for the same reasons: they never nailed the difference between client money and business money, or they panicked at double-entry bookkeeping. Let us fix both. This is the FLK2 detail you can actually control.
Why Solicitor Accounts carries weight in SQE1 FLK2
Solicitor Accounts sits inside FLK2, alongside Property, Land Law, Trusts, Wills and Criminal practice. It is examined the same way as everything else in SQE1: Single Best Answer MCQs across two papers of 180 questions each, five hours and twenty minutes per paper. There is no separate accounts exam — the questions are folded into the wider FLK2 paper, and they reward precision over waffle.
The governing framework is the SRA Accounts Rules 2019. They are short — deliberately so — and built around a single protective idea: client money must never be at risk from the firm's own finances. Once you internalise that idea, most questions answer themselves. The trap is that the SRA assumes you can apply the principle to a concrete ledger entry, not just recite it.
One sentence to tattoo on your brain: client money belongs to the client; business money belongs to the firm; the two must be kept separate at all times. Almost every breach in an exam question is a version of mixing those two up.
What counts as client money — the FLK2 definition that trips people up
Under the rules, client money is money a firm holds or receives that relates to regulated services delivered to a client. In practice it falls into a few buckets you should be able to recognise instantly:
- Money held on behalf of a client or third party (for example, completion funds on a property purchase).
- Money received for fees and unbilled disbursements before the firm has delivered a bill.
- Money held as a stakeholder, such as a deposit pending exchange.
- Money held for, or received in respect of, a trust where the firm acts as trustee.
Compare that with business money (also called office money): the firm's own funds, money received in payment of a bill already delivered, and money received to cover disbursements the firm has already paid from its own account. The classic FLK2 question hinges on timing. A payment "on account of costs" is client money — the work is not yet billed. The moment the firm raises a bill for that work, the relevant sum becomes business money and must move out of the client account, usually within 14 days.
Watch for the small but lucrative exceptions. There is a de minimis allowance for small sums and a route to operate the rules more flexibly where a firm only ever handles limited categories of client money. The SRA also lets a firm receive mixed payments — part client, part business — provided the money is promptly allocated to the correct account. If a question shows a mixed cheque sitting undivided for weeks, that is your breach.
Double-entry bookkeeping without the panic
Here is the part that makes non-accountants sweat, and here is why it should not. The SQE does not want you to be a bookkeeper. It wants you to know which two ledgers move and in which direction. Every transaction has two sides — a debit and a credit — and they must balance.
Keep three anchor facts in your head:
- The firm runs a client ledger for each matter (split into a client-side column and a business-side column) and separate cash account columns for the client bank account and the business bank account.
- Receiving money into a bank account is a debit to the cash account and a credit to the client ledger.
- Paying money out is a credit to the cash account and a debit to the client ledger.
Run a quick worked example. A client sends £5,000 on account of costs. You record a debit to the client cash account (money has come in) and a credit to the client side of that client's ledger (you owe it to them). Later you deliver a bill of £2,000 plus VAT. You raise the bill on the business side, then transfer £2,000 (plus VAT) from client to business account — credit client cash, debit client ledger; debit business cash, credit business ledger. Two clean mirror entries. If an exam option leaves the bill sitting unpaid in the client account indefinitely, it is wrong.
Exam shortcut: when money arrives, ask "is this client or business money?" first. The answer dictates which bank account it touches, and the rest of the double entry follows automatically. Decide the category, then post the entries.
Breaches, residual balances and putting things right
The rules require any breach to be corrected promptly. If client money is paid into the business account by mistake, it must be moved to the client account without delay. If a withdrawal leaves a client ledger overdrawn — effectively using one client's money for another — that is a serious breach. The exam loves the scenario where a payment is made for Client A but there are insufficient funds on A's ledger, so the firm is silently dipping into the general client account funded by Clients B and C. Spot it and you bank the mark.
Know the rules on interest too. A firm must account to clients for a fair sum of interest on client money held, and most firms set this out in a written policy. And keep an eye on residual balances — small leftover sums on closed matters. There is a route to withdraw them (often to charity) once reasonable steps have been taken to return the money and the amount is within prescribed limits, with records kept. Larger residual balances need SRA authorisation.
Finally, do not forget the compliance scaffolding: regular client account reconciliations (the client ledger total must equal the client cash account total must equal the bank statement), accurate contemporaneous records, and — for most firms holding client money — an annual Accountant's Report, which only needs to be delivered to the SRA where it is qualified or where certain thresholds are exceeded.
A practical revision plan for the FLK2 accounts questions
Reading the rules once will not get you there. Solicitor Accounts is a doing subject. Here is how I would spend the time:
- Drill double entry until it is automatic. Write out the four standard journeys — money in/out, client/business — on a single index card and reproduce them from memory every morning for a week.
- Practise classification first. Before posting anything, force yourself to label every receipt as client or business money. Most errors are classification errors, not arithmetic errors.
- Use VAT-laden examples. Disbursements, the principal method, the agency method — these recur. Make sure you can handle VAT on the firm's own bill versus VAT on a supplier's invoice.
- Time yourself. SQE1 gives you roughly 1.7 minutes per question. An accounts MCQ should not eat three. If a ledger looks hairy, identify the single decisive rule and move.
One last reassurance. Because the SRA Accounts Rules are compact, this is a topic where high marks are genuinely achievable for anyone who puts in focused repetition. Unlike, say, the sprawling case law of Tort, you can read the whole rulebook in an afternoon. The marks come from applying it under pressure — and that is a trainable skill, not a talent.
If you remember nothing else, remember this: keep client money sacred, keep your two entries balanced, and correct breaches at once. Do that, and the FLK2 accounts questions stop being a threat and start being free marks on your way to the solicitor qualification.
How CELE SQE can help
If you want structured drilling rather than guesswork, our SQE1 courses run from £3,720 (Long-term) through £2,750 (Mid-term) to £1,750 (Short-term), with single-FLK options at half price if you only need to shore up FLK2. Many candidates pair a course with our SQE1 Question Bank at £575/month to hammer the accounts ledgers until the double entry is second nature, and full textbooks are available at £950 (or £570 for a single FLK set). Reach us any time on WeChat SQE100, at [email protected], or via celebar.com — no pressure, just point us at the topics that are keeping you up at night.