In Which Account Are Post-Dated Checks Received Classified?

 Solution:

The correct answer of this MCQ is A), as post-dated checks / cheques are encashed or deposited into bank only when the date mentioned on it arrives. When the company / corporation received it, it is considered as an assets (Account Receivables) from which the company will get benefit on stated date. It is a promise from clients to pay to company on given date. It can be considered as a promise or evidence of Advance Payment to be received on the specified date stated on it. The clients / customers are still liable to pay to company in case of Dishonor of Checks.

Post Dated Check / Cheque Journal Entry

Before the arrival of specified date mentioned on post-dated check or when it is received from a customer, the company neither records it as a cash receipts nor reduce the balance of Accounts Receivables, so there is no Journal Entry to record in the Books Of Accounts. So, there is no effect on Accounting Equation and Financial Statements. However, on specified date mentioned on it, the company should record it as cash collection from receivables.

On the arrival of stated date, the company can either deposit it into the bank or enchased it (Accounts Receivable) to convert into cash to get benefits.

The choices like "Prepaid Expenses", "Cash" and "Payables" are not the correct choices here.