Bookkeeping question - cheque dates

Lemoncurd

I'm doing the accounts for a small charity on an accruals basis. When cheques are written they are entered into an accounting package using the cheque date. Does this cheque date always remain the same or when reconciling against bank statements should it be changed to the date the cheque is paid?
Just wondering what happens at year end and what should be accounted for in which year.
Thanks!

Owain_Moneysaver

The cheque date remains the same.

At the end of the year you will have:

Liabilities - cheques written but not presented,
Assets - cheques received but not paid in, and cheques paid in and in the course of clearing

on the balance sheet, copied over from the Bank Reconciliation.

HappyMJ

The cheque date doesn't really matter. With accruals accounting you owe or are owed the money as soon as the invoice is issued to you or you issue an invoice to a company/customer. They would then appear as a creditor or a debtor in the accounts until they pay or are paid. The exact date that happens doesn't matter as it's just a transfer of funds from one account to another.

Lemoncurd

Brilliant thank you! that makes sense. Will go and do some more reading up on it.

Lemoncurd

Hope you don't mind me asking another question along similar lines.... our main source of funding for the 1st quarter of this year was paid into the bank account 2 days before the end of the last financial year. This means that when running end of year reports it looks like the charity made a large profit when actually it would have shown a loss had the payment gone in a week or two later like it has done in previous years.
What would normally be done in these kind of circumstances? what is the correct way of handling it when if comes to end of year reporting?

firstinflight

If you're correctly accounting for things on an accruals basis, then the timing of the funding payment shouldn't matter! You should be recognising the funding income in the period it relates to, regardless of when the cash flow actually occurred.

If you receive cash before the period it relates to then you need to need to set up a deferred income liability upon receipt of the funds and then release the balance to the income statement in the correct period.