Why should I use a specialized legal accounting program?

CosmoLex Team

A law firm is like any other business in that it must have a system for recording its financial transactions in order to generate the reports that the owners and officers can use to evaluate the company’s financial health. General accounting programs meet most companies’ needs because they allow the business to record financial transactions and generate the , profit … Read More

Does my accounting program use double-entry bookkeeping?

CosmoLex Team

bookkeeping is a simple type of financial recordkeeping used by individuals and businesses that don’t carry unpaid client balances, have only a few employees, and don’t owe people money.[1] Generally businesses that 1) have less than $5 million in annual gross sales or less than $1 million in gross receipts for inventory sales, 2) are not a C Corporation, 3) … Read More

How does double-entry bookkeeping work?

CosmoLex Team

Accountants use your law firm’s , to generate the balance sheet and profit & loss (income) statement. The trial balance contains all general ledger accounts and shows the balances in those accounts. Debits appear on the left side of the trial balance and Credits appear on the left side of the trial balance.[1] Assets and expenses increase with a debit … Read More

What is a journal entry and when do I need to use one?

CosmoLex Team

are used to record a law firm’s business transactions onto its books.[1] The term journal entry comes from the times before computers existed, when businesses recorded their business transactions in a hardbound book called a journal. Each page in the journal was assigned to a different account, and every journal entry contained at least one debit and one credit and … Read More

When do you use a “debit” vs. a “credit”?

CosmoLex Team

Law firms use standard accounting methods and rely on bookkeeping to ensure the accuracy of their financial records.[1] Double-entry bookkeeping systems use journal entries that contain at least one debit and one credit to record a business transaction onto the firm’s books.[2][3] The accuracy of each journal entry depends upon your bookkeeper’s ability to determine which part of the transaction … Read More

Can I transfer my data to a new accounting program?

CosmoLex Team

The process of transferring financial data from one accounting program into a different program is called . The detailed steps for migrating financial data into a new accounting program are as follows:[1][2] Pick a cut off date – a date before which you will not make any further changes Decide whether you want to transfer your cleared transactions, your historical … Read More

What steps can I take to protect my firm from embezzlement?

CosmoLex Team

You can protect your law firm from embezzlement by setting up , getting to know your employees, and looking for suspicious behavior. Setting up Internal Controls Internal controls are processes and systems businesses put in place to protect company assets, including bank accounts.[1] It is best to prepare written fiscal policies and procedures detailing the internal controls you want your … Read More

What is a chart of accounts?

CosmoLex Team

The is a book that contains all of the accounts where business transactions are recorded. The list of all the accounts contained in the is called the and they appear in the order that they occur on the financial reports[1][2] as follows: Assets Liabilities Owner’s Equity Operating Revenue Operating Expenses Non-Operating Revenues and Gains Non-Operating Expenses and Losses When you … Read More

What do "debit" and "credit" mean?

CosmoLex Team

Journal entries, the entries recording the law firm’s business transactions on its books, are made up of at least one debit and one credit. A is the part of the journal entry that increases an or account and decreases a or account.[1] Accounts which increase when debited are found on the left side of the and the , and include … Read More

What is the difference between a hard cost and a soft cost for a law firm?

CosmoLex Team

A hard cost, also known as a direct cost, is one that is paid directly to a vendor on behalf of a client for services provided in association with a specific client matter. [1] Hard costs typically include court reporter fees, filing fees, mediation fees, hearing transcript fees, etc. Good law firm practice management, through the use of a legal … Read More