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Entry in Books of accounts against collection of revenue

A/c entries 563 views 1 replies

Harun-Ar-Rashid

others

33 Points Joined June 2010

Hi Guys,

Let's think, a private Ltd. company used to perform entry for collection of their revenue after ensure liquidity of the collection(cheque or other bank instrument) i.e. bank clearance date wise.

So there is a difference between Received date (i.e. date of Money Receipt provided by the company against collection) & date of entry in books of account (i.e. voucher date for the collection where customer ledger... credit). And no need of bank reconciliation for the deposit of revenue collected.

But they maintain a collection register where record of all collection(revenue) kept "received date wise" (which record kept in books of account- "bank clearance date wise" (except cash collection).

Now Please mention whether or not it's a smart practice & complience with accounting concept & standard or other professional point of view. if not then what's the problem may arrise you think.

Thanks

Replies (1)

darpan chheda

Accounts Manager

90 Points Joined February 2009

Ideally entry should be made in the books of accounts at the time of deposit of cheque with the bank. In my opinion, the practice followed by the company is not a good one. Following problems may arise incase the said practice is followed

1. As the entries are reflected at the time of clearance of cheques only, the ledger accounts may not reflect the correct position

2. Issues may arise incase of cheque returns/bounced

3. Some times cash discounts are given to the suppliers for early payment. in that case, if entries are done at the time of clearance of cheques, the calculation of cash discount may be inaccurate