Business, Legal & Accounting Glossary
A cancelled check is referred to as a voided check. A check cannot be used after it has been properly voided. A voided check can occur for a variety of reasons. For example, there was an error in filling out the check, or the check was blank or only partially filled in, or the check was issued in error, or the check was submitted to an employer for use in setting up a direct deposit payroll account. The voided check is not cashed in any of these cases.
The check would have been recorded in the accounting system when it was created, so a reversing entry must be made that debits (increases) cash and credits (decreases) the account to which the payment applies. Thus, if the payment was for an expense, the credit would be applied to the related expense account; if the payment was for the acquisition of an asset, the credit would be applied to the related asset account.
If a check register is present, the reversing entry is required to record the elimination of the accounting transaction associated with the check number printed on the check.
A menu option for voiding a check is usually available in a computerised accounting system, as this is a common enough activity to warrant its own routine.
A voided check may be utilised in a variety of contexts. The most obvious example is when a check is written incorrectly, such as by declaring the incorrect payee or amount to be paid. By writing “Void” across it, an individual cannot use the check to fraudulently take funds from the individual’s checking account. Another application for a cancelled check is to initiate direct deposit payments from your company into your bank account, typically for payroll payments. Employers require a cancelled check in order to obtain bank account information from the check’s bottom line. A voided check may also be used by a lender to initiate an automated loan payment. As with direct deposit, the lender will wish to use the bank account information specified on the check’s bottom line.
To set up payroll direct deposit, many employers require employees to submit a voided check. An employee simply writes “Void” in large font across a check and gives it to the human resources department to accomplish this. If you want to be extra cautious, write “Void” across the payee line, the signature line, and the payment box. Whatever method you use, do not write on the magnetic ink characters across the bottom of the check, as this may obscure the bank number and account number required by the human resources department. Employers request a voided check because your checking account information is printed across the bottom of the check, which is then used to set up direct deposit payments to you.
Before handing over a voided check to an employer, it’s a good idea to make a copy of the check so you know how it was used.
A voided check can be perforated, crossed out, or have “Void” written across it, shredded, or simply stored in a voided checks file. It is best to permanently deface or destroy a voided check so that no one can present it to a bank and expect to be paid for it at a later date. If the check is not currently in the company’s possession, contact the bank and request that a stop payment be placed on the check (for which the bank will charge a fee). If you write “Void” on a check, always use ink; someone could erase a pencil “Void” mark and then attempt to cash the check.
It is not possible to void a check that has already been sent to someone. Unless you immediately contact your bank and request a stop payment on that check, the recipient will be able to cash it. When the payee presents the check, the bank will be unable to honour it. When you request a stop payment, the bank will charge you a fee. You must extract the necessary information from either a copy of the check or the check register in order to send the correct information to the bank to stop payment.
This situation can occur if you write a check for the incorrect amount, send it to the incorrect party, or realise after the fact that you do not have enough cash in your checking account to fund the check when it is presented for payment.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Voided Check are sourced/syndicated and enhanced from:
This glossary post was last updated: 11th August, 2022 | 0 Views.