Cash Management- Cheque Clearance and Accounting Standards?

Question

Hi

In accounts, when a cashier's order is issued, it is taken as 'PAID' but what about issuing cheques? Is the status in the Enterprise Resource Planning (ERP) system taken as 'ISSUED' or 'PAID'? If it is definitely 'ISSUED', what is the rationale? What about 'PAID'?



Thanks

Answer 1

Once a cheque is issued, it is taken as paid. If the payee hasn't presented it by month-end, the unpresented cheque features in the bank reconciliation, that's all, but for accounting and cash flow statement purposes, it's paid.