The Cheque received journal entry is to account for the bank receipts. Such receipts will primarily be from the debtors. However, there will be receipts from the other transactions as well. Such examples are added below for reference
Receipts relating to
- Insurance Claims
- Security deposit as part of business contract or agreement
- Sales of Asset
- Scrap Sales or Other income that is ancillary to primary business operations
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Table of contents
Depositing Cheques results in an inflow of funds into the business. Thus, the bank balance will increase. As such, we need to consider Bank GL for all cheque-related transactions (either issues or receipts).
Every journal entry will have an equal amount of debit and credit. So, there shall be at least 2 GL accounts to record a transaction.
Accounting gives flexibility in recording the transaction. This flexibility starts right from
- Naming the accounts (For example, we can name a borrowings as Loan GL or Loan from ABC Bank GL)
- Rules to follow (Golden vs Modern)
- Approach to record entries (We can either record depreciation with or without having accumulated depreciation GL)
Cheque received journal entry
Let’s understand the Cheque received journal entry by assuming it’s from debtors. So, the two accounts here are Bank GL and Debtors GL.
The golden rules of accounting form the basis for recording entries. According to these rules, we need to categorize the identified GLs into Personal, Real, and Nominal accounts. Refer to the Journal entry article to get a comprehensive understanding of these rules.
Real accounts comprise asset balances, and there are two such accounts in this transaction.
The Real account rule is to debit what comes in and credit what goes out.
From the above, we can confirm that the Cheque is coming in and the debtors’ balances are reducing. Therefore, the journal entry is

Also Read: Cheque deposit in a bank and Cheque dishonor entry
What’s an entry for insurance claims?
For example, consider Fire Failure Company lost its goods due to a fire accident. So, all the goods were lost. However, the entity has insurance coverage for the total amount. Let’s see how the entry is
Scenario I (Receipt of full insurance proceeds)
Receivable Journal Entry
Entry to record the receivable amount is

Cheque Received Journal Entry
Entry to record the cheque received

The above example demonstrates that the insurance claim is fully honored. However, there can be a different scenario. What if the insurance claim does not cover the full inventory cost and there is a loss, then the journal entries will be as below.
Scenario II (Receipt of partial insurance proceeds)
Receivable Journal Entry

Note: We need to add the Loss account to the extent amount that is not paid by the insurance company. In other words, the total inventory cost is split between insurance claims receivable and the remaining amount as loss.
Cheque Received Journal Entry will be the same as in the above scenario. The only difference is in the amount. As the insurance company honors the partial amount, we need to record the transaction for the amount paid by insurance, not the full amount.
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Frequently Asked Questions
Is receiving a cheque credit or debit?
Receiving a Cheque is a debit in the Journal entry as there is an inflow of funds.
Is the check considered Cash in the journal entry?
Cash transactions are not that frequent. So, all Checks are deposited in the bank account, which is why we consider Bank GL for recording these Check transactions.
Note: There are some differences in spellings for words. For instance, Cheques and Checks are used in India and the US respectively. However, there is no difference in accounting language (treatment) 🙂
What is a cheque in accounting?
A cheque is a financial transaction to pay or receive amounts through a safe medium like a bank. So, it’s an alternative mode to Cash.
Cheque received journal entry Summary:
Cheque-received journal entry records the bank transaction resulting in the receipt of money from customers, insurance claims, or other ways as a part of business operations. We will debit the bank account and credit the customer account as this transaction increases the bank balance and reduces the debtor receivable balance. The receivable balance is converted into a more liquid form (Bank balance).
Recording the transaction where the cheque is involved is relatively easy. That’s because we already knew about the first GL. Our job is half done. We need to figure out the remaining GL to complete the recording of this transaction.
Always focus on understanding the underlying fundamentals before recording the transaction. It helps us become better at accounting. That’s what we believe in CArunway.
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