Cash accounting


F

Fred

What date actually counts? Is it the date a cheque is received or when the
account is credited? Similarly for a purchase is it the date a cheque is
made out or when the money leaves the account?

I know its a basic question which I should know but would appreciate an
answer.
 
Ad

Advertisements

D

Dave

What date actually counts? Is it the date a cheque is received or when the
account is credited? Similarly for a purchase is it the date a cheque is
made out or when the money leaves the account?

I know its a basic question which I should know but would appreciate an
answer.
Did you manage to leave out a reference to VAT or is it something else
you're on about ?

Dave
--

----- + ----- + -----
The internet is too big to fit in your recycle bin
Do you REALLY want to delete it?
----- + ----- + -----
 
D

Doug Ramage

Fred said:
What date actually counts? Is it the date a cheque is received or when the
account is credited? Similarly for a purchase is it the date a cheque is
made out or when the money leaves the account?

I know its a basic question which I should know but would appreciate an
answer.
Assuming the questions relate to the Cash Accounting scheme for VAT:

1. The date the cheque is received, assuming it is not post dated. If it is,
then the date on the cheque.

2. When the cheque is sent. If post dated, the date on the cheque.
 
F

Fred

Doug Ramage said:
Assuming the questions relate to the Cash Accounting scheme for VAT:

1. The date the cheque is received, assuming it is not post dated. If it is,
then the date on the cheque.

2. When the cheque is sent. If post dated, the date on the cheque.
Well spotted. Yes it was to do with VAT. Oh dear I assumed it was when you
actually got the money or when it was parted from you. After all a cheque
is only a "promise to pay" and not actually money itself. I'll remember for
the next return!

Many thanks.
 
R

Ronald Raygun

Doug said:
Assuming the questions relate to the Cash Accounting scheme for VAT:

1. The date the cheque is received, assuming it is not post dated. If it
is, then the date on the cheque.

2. When the cheque is sent. If post dated, the date on the cheque.
Post-dating is only in a way a "gentleman's agreement" between drawer
and payee, in which the payee agrees not to present the cheque prior
to the date on it. But in law there is no reason a cheque could not
be presented early. A collecting bank, if instructed, *must* accept
the cheque and submit it for collection in the normal way, even if
presented before the date on the cheque, and the drawee *must not*
bounce the cheque for this reason alone.

Does this mean for VAT purposes the date on the post-dated cheque
prevails even though it was cashed prior to the date on it?
 
D

Doug Ramage

Ronald Raygun said:
Post-dating is only in a way a "gentleman's agreement" between drawer
and payee, in which the payee agrees not to present the cheque prior
to the date on it. But in law there is no reason a cheque could not
be presented early. A collecting bank, if instructed, *must* accept
the cheque and submit it for collection in the normal way, even if
presented before the date on the cheque, and the drawee *must not*
bounce the cheque for this reason alone.

Does this mean for VAT purposes the date on the post-dated cheque
prevails even though it was cashed prior to the date on it?
C&E have not anticipated that. :)

Date of payment of the cheque would seem to be the likely option.
 
Ad

Advertisements

M

mcdickenm

The date that actually counts it when the account is credited and/or debited.
 
D

Doug Ramage

What is your authority for that statement, as it conflicts with C&E's
position?
 
B

BT

mcdickenm said:
The date that actually counts it when the account is credited
and/or debited.

Not according to C&E. This is an extract from Notice 731:
3.2 When must I account for the VAT on my sales?

VAT on your sales (output tax) must be accounted for on the VAT
return for

the VAT accounting period in which you receive a payment from
your

customer. For the purposes of the cash accounting scheme, the
date you are

paid depends on the way in which your customer pays you. The
rules are as

follows:

.. Cash (coins or notes): you receive payment on the date you

receive the money.

.. Cheques: you receive payment on the date you receive the

cheque or the date on the cheque, whichever is the later. If the

cheque is not honoured you do not need to account for the VAT. If

you have already accounted for the VAT you can adjust your

records accordingly.

.. Giro, standing order or direct debit: you receive payment on
the

date your bank account is credited with such a payment.


--
Robert Killington
visit www.vatark.co.uk
for help with VAT

To e-mail me please do so via my website.
 
D

Dave

The date that actually counts it when the account is credited and/or debited.
Absolute rubbish!!
Following cut and pasted from HM C&E website:


If you are paid by:
then the date you receive payment is

cash (coins or notes):
the date you receive the money

cheque:
the date you receive the cheque or the date on the cheque, whichever is
the later. (If the cheque is not honoured you do not need to account for
the VAT. If you have already accounted for the VAT you can adjust your
records accordingly).

giro, standing order or direct debit:
the date your bank account is credited with such a payment.




If you pay by:
then the date you make payment is

cash (coins or notes):
the date you pay the money.

But remember - you need a receipted invoice to claim back VAT on
purchases you have paid for in this way.

cheque:
the date you send the cheque or the date on the cheque, whichever is
the later. (If your cheque is not honoured, you cannot reclaim the VAT.
If you have already claimed the VAT you must adjust your records
accordingly.)

giro, standing order or direct debit:
the date your bank account is debited with such a payment.


Full info at:
http://www.hmce.gov.uk/forms/notices/731.htm

Dave
--

----- + ----- + -----
The internet is too big to fit in your recycle bin
Do you REALLY want to delete it?
----- + ----- + -----
 
F

Fred

Fred said:
What date actually counts? Is it the date a cheque is received or when the
account is credited? Similarly for a purchase is it the date a cheque is
made out or when the money leaves the account?

I know its a basic question which I should know but would appreciate an
answer.
Many thanks for all the replies. I think consensus is it is the date when
the payment is received/made in the form of cash, or the date of
sending/receiving a cheque. The exceptions are if the cheque is not
honoured or if it is post dated.

Some of the receipts have been by BACS which I assume will be the date seen
entering the account. Interesting that I am also am sent a dated remittance
advice and receive this before I actually see the money!
 
Ad

Advertisements

M

Mike Phipps

I think the key thing is to do with control of the funds

Once you have the cheque you then control (subject to bank machinations)
when it is presented - a BACS notification gives no such control

It's the same as paying - you theoretically lose control of the money when
you hand over your cheque - which is why so many cash acc businesses pay at
the end of a VAT quarter!!


Mike
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads

USA How to account buying common stock in Cash Basis Accounting? 1
Cash account? 4
Cash Accounting 3
Cash Account 1
Cash Accounts in Account List 0
Cash In an Investment Account 7
Investment cash accounts 5
Account for cash back 5

Top