A.M. - Accounts

We have several Stale Cheqes (Cheques which have been issued by us but not encashed by the receiptient of cheque and cheque is older then six months) in our books of accounts for past 1-2 years.

Is there any guidance from Institute on Accounting treatment of these items.

If not, please tell me the treatment which should be followed .


Take Credit in Cash Book under different account head like "Liability for stale cheque".Maintain a detailed schedule of this liablity account code. If subsequently claim comes for payment make payment voucher for revalidation of cheque or even for fresh cheque.

Dear Arun, If a party does not present the cheque for more than 6 months, than practically, in most cases they are not comming back to ask for payment. So it is better to write off the amount.

Stale cheques needs to reverse.Create a liability account or otherwise debit to the party a/c. But anyway stale cheques should reverse. as per concept of prudence,we are not recognising future profits(bcoz created a liability).

as per accounting concepts, if the issued cheques are not vitalising, and the cheques has gone stale then the Liability for unclaimed amount may be shown in the balance sheet. Moreover, as the per the Limitation Act, if any debt is not claimed within 3 yrs from the due date on which it is to paid, then the person shall not be liable to pay it after the said 3yrs. so in my view, you should book such profit after third yr.


Its always better to reverse the entry from the original treatment since it may go on appearing in BRS. If the Creditor/Receiver has not made any claim U can pass an entry as receipt in the Bank books since you are debiting and effecting payemnt at the time of original entry.

Suppose a chq has been issued for some expenses and the chq has become stale now you can reverse the expenses.


A cheque which is more than 6 months old is known as a stale cheque. A bank because of the custom prevailing for centuries have followed the custom of rejectiong stale cheques stated above( see paget on Banking). But there is no legal basis . Sec 73 of the Negotiable Instruments Act 118 lays down the rule that the cheque must be presented to the drawee for payment within a reasonable time. What is reasonable time is a question of fact . Reference may be made to Sec 105 to see what is reasonable time. It is laid down therein that what is reasonable time is to be decided based on the nature of the instrument and the usual course of dealing etc. So more than 6 months old cheques are treated as stale cheques because of the practice of banks in the "course of dealing" in cheques.

     Regarding the accounting I am of the opinion that the original entry needs to be reversed. The payments can still be made and only when it is sure that there will not be any claim the same needs to be written off. Expiry of the limitation period can be one of the grounds for write off.

siva208 @ yahoo.com

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