Preview Questions Law Firm Accountant | Role Specific Skill

Question 1: What is the role of "tax credits" in law firm tax preparation, and how can they be applied to reduce the firm's tax liability?

Which action should you take?

Choose only one option

Tax credits only apply to individual tax returns, not firms

Tax credits directly reduce the firm's tax liability, including credits for research and development, and certain business investments

Tax credits are only available to law firms operating in certain jurisdictions

Tax credits are applied to increase taxable income, reducing deductions

Question 2: How does a Law Firm Accountant factor in "revenue from new clients" into a forecast?

Which action should you take?

Choose only one option

By predicting revenue from new clients based only on sales targets

By estimating new client revenue based on market conditions, marketing efforts, and historical data

By assuming the firm will retain all clients and no new clients are needed

By excluding new client revenue from the forecast as it is uncertain

Question 3: How does a Law Firm Accountant forecast "general office expenses" like rent, utilities, and supplies?

Which action should you take?

Choose only one option

By reviewing historical expense patterns and adjusting for expected price increases or changes

By estimating office expenses based only on the current month's usage

By excluding these expenses entirely and forecasting only client-related costs

By allocating a fixed amount each month without considering historical data

Question 4: How should "client funds" in trust accounts be recorded in bookkeeping?

Which action should you take?

Choose only one option

Client funds should be recorded as assets until they are disbursed to clients or paid to the firm

Client funds in trust accounts should be recorded separately as liabilities, ensuring that they are not used for firm operations

Client funds should be recorded as income, as they belong to the firm once received

Client funds are treated as loans to clients and should be recorded as receivables

Question 5: How should "trust account deposits" be handled in the law firm's books?

Which action should you take?

Choose only one option

Trust account deposits should not be recorded until the case is settled

Trust account deposits should be excluded from bookkeeping records

Trust account deposits should be mixed with operating funds to simplify accounting

Trust account deposits should be recorded separately from the firm's operating funds

Question 6: How does "debt servicing" (e.g., loan repayments) impact law firm forecasting, and what considerations must be made when budgeting for these expenses?

Which action should you take?

Choose only one option

Debt servicing affects only operating costs, not the firm's profitability

Debt servicing is irrelevant in the budgeting process for firms with no capital debt

Debt servicing applies only to law firms with significant loans or mortgages

Debt servicing affects cash flow forecasts, and loan repayments should be included in the budget to ensure adequate liquidity