NSF Check
Accounting glossary · Understand, connect, apply
An NSF check is a check returned unpaid because the drawer’s account has insufficient funds. NSF stands for not sufficient funds.
Example
A customer’s $150 check is returned. The seller normally reinstates the receivable and reduces recorded Cash, with any fees accounted for separately.
Remember the difference
A returned check is not a new sale. Investigate collection and credit-loss implications.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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