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Fake currency treatment in the books

rohit kumar singh (student) (48 Points)

20 June 2013

Dear All ,

I have a client who has debited the accounts of bank charges for fake currency discovered during deposit in bank.

please Guide me through.What shall be the correct accounting treatment in the books of accounts.

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1 Replies

Milind M. Kulkarni (Practicing CA) (580 Points)
Replied 21 June 2013

Accounting to bank charges is not correct. I believe our job is not just to ensure correct accounting but also to guide the client to pursue the matter. In the given case, the client should find out from where/ whom the fake currency were received and try to recover the amount from the party. If possible, they can take legal action against the fraudulent person.

If despite all efforts and after ascertaining the facts, the amount cannot be recovered, it can be debited to appropriate loss account (such as Loss due to embazzlement/ Short collection and so on).