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Subject Topic: doubt from cash flows (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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shilpjain
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Posted: 04 Jul 2009 at 16:03 | IP Logged  

 Post dated check from customer dated one month from the balance sheet date -$250 .
Would that be considered in cash and cash equivalents as of balance sheet date for cash flow purposes ?
I thought it would be considered as cash , since the cash will be available to us within three months , but the answer is NO .
Could anyone explain this to me .
Thanks



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rumboj
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Posted: 04 Jul 2009 at 16:20 | IP Logged  

But the check is postdated after the BS date; it isn't negotiable at the BS date so it can't be listed as cash and cash equivalents.  All your other cash and cash equivalents are READILY convertible to cash AT the BS date.

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Nan - Louisiana
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Posted: 04 Jul 2009 at 16:56 | IP Logged  

Is the check in your office safe, or have you presented it at the bank for deposit?  From the tone of the question it seems you are still holding it, so the answer is NO. 

However, the UCC does permit the bank to accept the item and cash it before the date written on the instrument.  This is not mandated on the bank; the bank does not have to accept the check prior to the date written, but it can.

UCC § 4-401(c) A bank may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty. 

http://www.law.cornell.edu/ucc/4/article4.htm#s4-401



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shilpjain
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Posted: 05 Jul 2009 at 06:14 | IP Logged  

Thanks Guys .

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