Every organisation in the normal course of business may receive cheques from the customers on the last day of the accounting year. The cheque might not be deposited in a bank on the same date. Generally, it is expected that all cheques should be deposited in the bank daily. But there may be a possibility that such cheques could not be deposited in the bank.

Therefore, it is quite important to ensure that the system of internal control is effective and such cheques should be properly accounted for to avoid any frauds and that the financial statements reflect a true and fair view.

As far as the internal control system is concerned, it should be ensured that a list of such cheques is prepared in duplicate and a copy of the same has been sent to person controlling the trade receivables’ ledger and cashier along with the cheques received. 

The person who is controlling the trade receivables’ ledger should ensure that proper accounting entry has been passed. The balance of cheques-in-hand should also be disclosed along with the cash and bank balances in the financial statements.