India CASHFLOW: when PD check come into AR account

[Prem Mohandas]

Hi All
My first day and first post here.

I am having a confusion on the following. when accepting post dated checks from customers they are transferred to accounts receivable account. (since its a form of payment).

But when preparing the cash flow statement does "post-dated" checks count in to the cash flow statement? please advice.

 

[Steve-LevelUp]

I view posted dated checks as not really received yet until the date on the check passed.

So, if you record the payment received without depositing it into the bank, then the payment isn't really received.

In the past, I have not really received many post dated checks, so I just put it in my drawer until the date passed, and then I deposited it and recorded it as normal.

If you are posting the payment to the books, then it would just show up on our Bank Reconciliation as a "Deposit In Transit".

This would not have an impact on your statement of cash flows. However, it would be misleading as your cash balances are actually lower than reported (as the deposits in transit have not actually been deposited). So, if you had extensive post dated checks, then I would not recommend posting it, but rather develop a separate process for tracking receipts of these and deposit them when the date has passed.

Regards
Steve

 

[Prem Mohandas]

Thank you, Steve