Bank account

Indian Accounting Standards 750 views 5 replies

Swami Ayyappa Nuli

TAX ADVISOR & CONSULTANT AT G.S.T SUVIDH

1372 Points Posted on 26 June 2014

My client has prepared cheques before 31st march but those cheques were taken by Creditor after 31st March. Client has reflected those entries in bank account and Creditor account as Creditor account Dr To Bank account. Is this treatment is viable with Accounting Standards? If not so pls refer me standard and case law' Thanks in advance.

Replies (5)

Guest

yes it is viable dear................ usually this happens on 31st march.. we presents cheque but usualy dont cleared... but we can enter the cheque in books on 31st march though it is not yet cleared...

reconcillation is attached usually with bank statement there after

Arpit Pachisia

734 Points Posted on 26 June 2014

Hello Nuli,

Even if the cheques bear the date 31st March or before, the cheques received after 31st March do not represent any condition existing on the balance sheet date i.e.31st March. Thus, the collection of cheques after balance sheet date is not an adjusting event.

Cheques that are received after the balance sheet date should be accounted for in the period in which they are received even though the same may be dated 31st March or before as per AS 4 “Contingencies and Events Occurring after the Balance Sheet Date”. Moreover, the collection of cheques after balance sheet date does not represent any material change affecting financial position of the enterprise, so no disclosure is necessary.

Thanking You

Rahul Theng

Tax Consultant

30 Points Posted on 27 June 2014

If the chq is not Clear u can.... Adjust following Journal Entry.. Chq. in Transit a/c (curr. Liability) Dr.. To Bank a/c ... Cr.. After clearing of Chq. Party's a/c ... Dr. To chq. In transit a/c ... Cr.