Checks cycle and cash accounts program application in, treasury and bank

Published By Accflex
Date of publication 2018 March 17

The cycle of incoming checks and its accounting treatment.

The check is a commercial paper "receipt paper" and it replaces cash as a means of clearing debts "debt clearance". Through this article, you will know the cycle of checks and the proper accounting treatment for all stages of check circulation supported by daily entries

And applying it to the treasury and banking program and the Accflex accounts program to manage facilities with its various activities


What is the checks cycle and what are the stages of the incoming checks cycle and its accounting treatment?

The check cycle is all the stages that the check goes through from the beginning of its receipt until its collection, and the first stage of the check cycle is to prove the entitlement to sell a commodity and receive a check from the customer

Pending sale

100,000 from the customer-client account.

1,000,000 to the sales account

We begin the checks cycle with proof of receipt of a check from the customer for his debit

100,000 from the receipts account

"Receipt of a check number .... From the client ... according to a receipt authorization number ..."

100,000 EGP to the clients' account.

This is a picture of the stage of receiving checks in the cash accounts program and treasury

Treasury and Bank Accounting Check Cycle

So that the customer bought his goods for the amount of 100,000 pounds and paid his debt with a check acceptable to pay with a certain maturity date, because we agreed that the check is one of the means of discharging his debt and replaces the money


This is the general form of receipt of the check from the customer in the cash and treasury accounts program


What are the cases of check disposal?

After receiving the check from the customer and keeping it, and as we agreed in the first stage of the check cycle, there will be more than one case of cashing the check, and each case has a different accounting treatment, and any of these cases is the second stage of the checks cycle

The first case:

Sending the check to the bank for direct collection or depositing it in the company’s account

This is the second stage of the check cycle, through which it is proven that the check went out from the company's check treasury for collection in the bank, and this stage is proven with two entries.

Report proof of check exit from the treasury for collection

From checks under collection account 100,000

 "Proof of cashing the check from the company’s treasury for the purpose of collection from the bank."

  To a securities account 100,000

Report proof of check collection from the bank and depositing the amount in the company's treasury or in the company's account in the bank:

EGP from the bank or fund account. 100,000

Collecting a check no. ... And depositing it in the safe of the company.

EGP to an account of checks under collection.100, 000 It is possible for the check to be returned for any of the reasons, for example, because there is no credit, in the bank that covers the check, or the Signature is not matched, and in this case it proves that the check has returned to the check treasury with a record contrary to the previous entry

The second case:

And sending the check to another bank other than the one to whom the check was drawn for collection on behalf of the customer "clearing collection":

 In this case, it will take place when the check is received from another bank from which the check is drawling this case; the treatment is no different from the treatment in the first instance.

The only point of difference is that in my bank's business, you get it in exchange for a check from another bank in Egypt, 10 to 15 pounds whatever the amount of the check.

In proving the collection of a check through the Clearing Upon receipt of a notice from the bank stating the collection of the check:

From the bank account.99985

Report proof of check collection No. ... Through clearing and proof of commission"

From a bank expense account 15

To a checking account under collection.100, 000

The check may be canceled or rejected because it is not covered by the customer, and in this case we make a reverse entry for the two previous entries to prove the client’s indebtedness with proof of deducting the bank commission from our account

From the receivable notes account 100,000

"Proof of rejection of check number and allowance to bank commission."

To a checking account under collection 100,000

Of collection commission account 15

  15 to a bank account.15

When returning the check to the customer:

From the customer account. 100,000

To a paperwork account.100, 000

The third case:

Endorsement of checks or transferring their ownership to someone other than the company, such as transferring the ownership of checks to a supplier for the purpose of paying off debts to the company, and we confirm this process with this entry


From the supplier account - the supplier. 100,000

Record endorsement of check no. ... To the supplier's account.

To a securities account. 100,000

We will soon be explaining the checks cycle through the accounting treatment of it in the next article. We will talk about the types of checks and how to deal with each type and how we can apply them in the Treasury and Bank Accounts program from Accflex.

Add a comment

Comment by مصطفي حجاب | 2018 March 17

جزاكم الله خيرا وربنا ينفع بكم

جزانا واياكم ونتمنى ان نكون دائما عند حسن الظن
Comment by ابراهيم حسن | 2018 March 26

شكراً جزيلاً علي المجهود الاكثر من رائع ، وربنا يجعله في ميزان حسناتكم

لاشكر على واجب ونتمنى ان نكون دائما عند حسن الظن
Comment by Mohammed’s | 2018 September 04


العفو يا فندم
Comment by ابراهيم عكاشة محمود | 2020 July 27

جزاكم الله خيرا ونفعنا واياكم بالخير

شكرًا لك يا فندم
Comment by waleed elzahar | 2023 March 28

لكم جزيل الشكر

العفو يا فندم