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cash method clarification

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#1 Minismommy



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Posted 08 August 2013 - 07:32 PM

under the cash method Payment by check is considered payment so long as the check is honored by the bank.


can anyne explain whether a cheque dated 12/31 not cashed till filing of return  will be condidered as payment?


any mcqs on this topic will be appreciated.





#2 Supreeth Mrdeeds

Supreeth Mrdeeds


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Posted 05 December 2013 - 04:35 AM

NO, since its a cash method of accounting checks are not considered until payments happens from the bank. At the end of the year your bank account will still be showing same balance, in case of accrual base accounting its the other way around. 

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#3 midnightlover



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Posted 29 December 2013 - 07:45 AM

i believe it's payment as of date on check, regardless of whether you cash the check.  that is how it works if the situation were reversed and you used a check to pay for your expenses.


also, if under accrual accounting, payment would be received when you complete work being paid for--regardless of whether check is received (let alone deposited).  that means, if you are hired to do someone's lawn, and you finish it 11/30, but receive payment 12/31, income is recognized at 11/30.