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Summary FAC1503 EXPLAINED STUDY GUIDE SEMESTER 2 2022 R75,00
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  5. FAC1503 - Financial Accounting Principles For Law Practitioners (FAC1503)

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Summary FAC1503 EXPLAINED STUDY GUIDE SEMESTER 2 2022

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FAC1503 FULLY EXPLAINED SEMESTER 2 2022 SEMESTER % TRUSTED workings, explanations & solutions. 060 966 3364 for assistance. ALL UNITS FULLY EXPLAINED AND ELABORATED

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  • August 25, 2022
  • 342
  • 2022/2023
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Module overview 2021

FINANCIAL ACCOUNTING PRINCIPLES FOR LAW PRACTITIONERS



CONTENTS MODULE OVERVIEW


LEARNING UNIT 1 – The nature and function of accounting

LEARNING UNIT 2 – Cash transactions and credit transactions

LEARNING UNIT 3 – Sundry items (Inventory, depreciation, VAT and bank reconciliations)

LEARNING UNIT 4 – Recording of source documents in the books of first entry

LEARNING UNIT 5 – Ledger accounts, trial balances and financial statements

LEARNING UNIT 6 – The transfer of trust monies to the business account

LEARNING UNIT 7 – Trust investments, interest received and bank charges

LEARNING UNIT 8 – Correspondents




1

, Module overview 2021

Dear student,

1. Word of welcome

We, as the lecturers for this module, would like to extend a sincere welcome to you as a student
in this challenging module. This module requires a great deal of dedication, time and practice if
you intend to pass, especially if you do not have a significant accounting related academic
background.


Why do students find it difficult to pass FAC1503 or to obtain the mark they are aiming for


Reason 1 Reason 2 Reason 3


Students do not allow themselves enough Students practice rote learning and
time to thoroughly cover the tutorial matter skip the critical theoretical preparation.
and revise the examples and learning
activities.


Accounting information is information that arises from business
transactions. The module is a practical module as the accounting
information is both measurable and quantifiable.



Deep learning occurs when Students must practice. Rote learning is learning
a student actively The way to study a practical by memorising facts
participates and engages module such as FAC1503 is rather than learning by
in their learning process. to practice. understanding.



The theory forms A student must have a Students who opt to prepare for
the basis for the sound theoretical the examination by memorising
infinite number of background it is likely that the feedback to the given
possible practical you will experience examples and activities, and
scenarios. problems with the practical concentrating on working through
sections previous examination papers.



Improve your chances of success by:
• Being positive
• Being proactive – Practice the questions and examples as much as
possible
• Being interested in the module ̶ Ensure you gain knowledge and
skills which will be beneficial when you practice your profession.
2

, Module overview 2021

2. Module objective

The objective of this module is to provide law students with a theoretical and practical
knowledge of the principles of financial accounting. A basic knowledge and understanding of
transactions is essential to complete the accounting records encountered in a legal practice.
This includes a thorough knowledge of the concept of trust money, including the applicable
legislation, rules and accounting treatment of trust money.

3. Why accounting?

The accounting processes of legal practices are governed by the Legal Practice Act, 28 of 2014
(hereafter referred to as the LPA), and the International Financial Reporting Standards
(hereafter referred to as IFRS). The aim of the LPA is to protect the interests of the clients of
the legal practice who hold trust monies. The LPA contains rules that must be adhered to
regarding the handling of trust monies.

The LPA stipulates that the Council of the Law Society may make rules, which are binding on
its individual members. The current Rules for the Attorneys’ Profession came into operation on
1 March 2016. Part V of the rules contains the accounting rules, namely rules 35.1 to 38.4.
These rules are discussed in the individual learning units to which they relate.

Rule 35.5 requires that a law practitioner keep in an official language of the Republic, proper
accounting records that relate to:
• His/her practice (business),
• money invested in a trust savings or other interest-bearing account on behalf of its clients,
• interest on the money so invested, and
• any deceased or insolvent estate or any estate placed under curatorship of which the
practitioner is the executor, trustee or curator or which he administers on behalf of the
executor, trustee or curator.

The practitioner must also prepare financial statements of the firm and be able to explain the
transactions and financial position of the firm.

QUICK Knowledge of accounting is necessary for law practitioners to understand the
NOTE
businesses and transactions encountered in litigation but it will not form part
of this module


Refer to the following websites if you wish to read further on the Acts mentioned above and the
Rules of the South African Legal Practice Council.

1) Legal Practice Act, 28 of 2014:
https://www.gov.za/documents/legal-practice-act

2) The Rules of the South African Legal Practice Council:
https://www.gov.za/documents/legal-practice-act-rules-20-jul-2018-0000

3

, Module overview 2021

4. What to study for legal accounting

• Understand the aim, nature and usefulness of accounting.
• Understand the accounting equation:
A = OE + L
• Know how to categorise your accounts; that is, know your Asset, Liability, Income, Capital
and Expense accounts (Use the Acronym ALICE)
• Understand the double-entry principle.
• Know what a source document is and how to prepare the books of first entry.
• What is a T-account -
An account in the general ledger (either debit or credit) is a record of each
financial transaction that takes place during the lifetime of a business. A T-account is a
visual representation of an account and it is called a t-account because it looks like a T.

Dr ACCOUNT NAME (T-account for GENERAL LEDGER accounts) Cr



• Be able to post from the books of first entry to the ledgers.
• Know the difference between business and trust accounts and be able to process
transfers.
• Be able to discuss the relevant sections of the Legal Practice Act, 28 of 2014 and section
54 (Accounting Rules) of the Rules made under the authority of section 95(1) of the Legal
Practice Act, 28 of 2014.
• Understand the accounting of conveyancing transactions.
• Be able to prepare a trial balance as well as a basic statement of financial position and a
basic statement of profit or loss and other comprehensive income.

5. How to study

You are advised to make use of a workbook designated for use with this module only, in which
you take down notes and enter responses to learning activities. If you heed this advice, the
workbook will prove to be a valuable resource when you prepare for the examinations.

This study guide contains a variety of learning activities.

• You should first study the theory and then work through the examples.
• Make sure that you understand the feedback before you attempt to do the comprehensive
learning activities on your own, without referring to the study material.
• You should then mark your answer against the answer provided in the study guide.
• Where your answer differs from that given in the study guide, ask yourself exactly where
you went wrong.
• If more than 10% of your answers are incorrect, study the section again and attempt the
learning activity/ties again, without referring to the study guide or your previous attempt.
4

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