[titoav15]

Hi guys, just had a question. Yesterday I was talking about minor expense recognition issue that came up. We cut a rent check for a material amount. The date of the check was 7.27.2017 and it was for august rent. It will not get deposited in July obviously. I moved the date in QB to August first so we don’t record it as a deposit, but the controller said that it can’t be moved since we cut it in July and that is not per GAAP. Any thoughts? Since it will not be cashed until August I think the money should still stay in cash account rather than in as a deposit since per GAAP the check must be cashed in order for it to be a deposit. Can someone shine some light on this? Also I told her let’s void and cut a check as of 8.01.17 she said not to worry about it.

BEC: 5/21/14 82! PASSED HALF WAY THERE!
FAR: 4/2/15 80! Almost there!
AUD: 69, 74, 4/3/14 81! PASSED
REG: TBD

[Radez]

I think per GAAP theory, if you haven't mailed the check, you still have control of the asset and the economic benefits haven't transferred, and therefore you should still report a cash asset in the amount of the check in hand.

For practical application purposes, not sure if Quickbooks allows for GL journal entries, or if its more of a cash-basis system, so can't provide guidance there. However, you're talking about an intra-quarter month (July into August), so your Controller's judgment is probably sound that it's not something to worry about.

[Missy]

Your controller is correct if it's a check you cut. Go by date on the check not when it is cashed. (For further clarification its referred to as constructive receipt) But you can put it to prepaid,and move it to expense on aug 1.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Author]

Replies