dear osho
The simple logic that we will never get a negetive cash balance as suppose if u have Rs 100 in ur money bag, u can only spend upto Rs 100,but not more than dat.its absolutely impossible to spend another Rupee from that.So negetive cash is impossible.
And in balance sheet the order as per company act, cash in hand will be shown as Cash in hand only.dont mess up it with the bank balance as it will be shown under Cash at bank.and if there bank O/d exist, then as per balance sheet representation we show it on liability side under current liabilty head.we cannot show a negetive bank balance under asset side.
And in case of cheques, i can say dat is a matter of bank reconcilliation statement and it does not makes a bank balance show negetive balance in balance sheet.
Remember : ur asset cannot be negetive.