1

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.

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    Records housed at different sources are rarely perfectly aligned. This is why account records are regularly audited and updated. You should use method number 1. Payable ledgers are more applicable to entities on accrual accounting. On a cash basis it's just another step that doesn't serve much of a purpose, imo. – quid Apr 26 '16 at 18:25
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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.

  • If I opt to double-enter the check and expense account (since checks are usually cashed rather soon after receipt), what would be the course of action in the rare event that the check never does get cashed? Would it be appropriate to erase the original double-entry, or better to create a new double-entry to revert the original transaction upon expiration of the check? – Vilhelm Gray Apr 29 '16 at 14:49
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    It probably depends on why the check didn't get cashed how you resolve it exactly, but that would be some new set of entries at the point that the check expires (or whatever happens that let you know that check isn't getting cashed). – user32479 Apr 29 '16 at 18:45

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