Cheques in Hand

Is there any scenario where cheques in hand can show negative balance.
Replies (3)
Quick Summary
This discussion explores whether 'cheques in hand' can lead to a negative balance. It explains that while the net balance can indeed be negative, particularly when issued cheques exceed received ones, it functions as a contra item. An example illustrates how post-dated cheques, both received and issued, can affect the balance sheet and bank account representation, depending on accounting software.

Net balance can be negative like cheque issued (but not sent) > cheque received (but not presented)
Yes it can be negative

It acts like a contra item. Example

1. ABC debtors a/c 5000

    To Sales a/c 5000

2. Purchases a/c 2000

    To XYX creditors a/c 2000

you received a post dated cheque for 5000 from debtors, issued a post dated cheque for 2000 for creditors today. So you made following entries like following and bank balance is 10000

1. Cheque a/c

    ABC   Debtors a/c

2. XYZ creditors a/c 

    To Cheque a/c

here cheque means bank. In the balance sheet we can show it as

By Bank a/c 10000

post dated cheque +5000

post dated cheque -2000

because this amount is not deducted or deposited from/into the bank yet. It depends upon the accounting software architecture.

 

 

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