Should written checks be accounted in Accounts Payable?

Question

Should the checks I write be logged via my Accounts Payable account, or just directly from my Bank Asset account to my Expenses account?

I see issues with both methods:

1. Bank Asset => Expenses
   • An entry in my Bank Asset account shows a withdrawal of cash from my bank checking account on the date I wrote the check.
   • However, my bank checking account does not match my personal ledger until the check is actually cashed (which may not occur for many days).
2. Accounts Payable => Expenses
   • An entry in my Accounts Payable account indicates the check is written for the respective Expenses; a subsequent entry in my Bank Asset account is made several days later to reflect when the check is actually cashed.
   • However, use of the Accounts Payable account implies that I have not yet paid for the expenses (which is not really true since I did write the check).

What method should I use to account for written checks? I want to show that I have indeed given the check as payment to the other party, but that the cash in my bank checking account has not been drawn yet.

Answer 1

Both are right, depending on context.

Accounts payable is a liabilities account. If you've got a bill that you have to pay eventually but you're going to carry on your books for a while (especially if it crosses a regular reporting interval like a calendar month or fiscal year), its double-entry should fall on the appropriate expense account and on accounts payable. When you eventually pay the bill, you'll have a double-entry that marks the debit from your checking account and credits the accounts payable to clear the liability.

If you've got an expense that you pay instantly, just double-enter the check and the expense account and don't worry about accounts payable since you never carried it as a liability.