Dishonoured cheque
A dishonoured cheque is a cheque that the bank refuses to pay. If the business had already treated a customer’s cheque as a receipt, that receipt must be reversed and the amount restored to the customer’s receivable. Any bank fee is recorded separately. The customer still owes the amount unless a separate assessment concludes that it is irrecoverable.
Worked example
A $600 customer cheque was recorded as debit bank, credit receivables. It is returned unpaid. Reverse it with debit receivables $600 and credit bank $600. A separate $15 bank charge is debit bank-charge expense and credit bank $15.
Common mistake
Do not automatically write off the customer’s debt or leave the returned cheque as an outstanding deposit in the reconciliation.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: returned cheque, bounced cheque