In real world, I do not think that you can spend more than what you have in Cash, unless you create liability. Therefore, showing negative balance in Cash or Bank Account is something which is not practical and confusing. Please correct me I am wrong.
In my view it should not allow to spend money if you do not have sufficient funds in your cash or Bank Account. Bank will not allow you to draw more than your available balance (Provided you have approved overdraft facility).
One example where negative balances are necessary is when you use a bank account to represent a credit card. Then, the bank account is a contra account. That is, the balance is normally negative. Only when you pay the statement does the balance return to zero. A positive balance in such a credit card bank account would show that money had been returned on your credit card in excess of what you might owe.
Also remember, Manager neither allows nor disallows actions. It provides a way of recording the actions you decide to take. And it reflects the real world. If you write a check with insufficient funds, your bank might pay it (if you have overdraft protection), it might charge you penalty fees, or it might return it. But none of those bank actions changes the fact that you wrote the check. Manager can record what you did only if negative balances are allowed.
Thank you very much for your clarification as far as Bank Account is concerned. But my confusion is still there with regard to the Cash Account. I mean if I don’t have cash, how can a system allow to spend more.
Believe me I have seen many accounting system, but I found Manager to be very good. This software has the capability of becoming a mini ERP program. I really appreciate your work and simplicity this software offers.
Thanks again for reply
Allowing negative balances is very important in accounting. With regards to cash and bank, I am sure @lubos will in the future make zero bank balances or negative figures appear in red to prompt the user before he spends money.
Once again, @Dilshad, Manager neither allows nor disallows. It only records. Think of it this way: if your cash account is positive, Manager doesn’t allow you to spend money. And it doesn’t spend money for you. You make that decision and take the necessary steps of obtaining cash from wherever you keep it and paying it to someone. What Manager can do, if you enter the transaction before actually giving the money to the other party, is tell you how much you will have left. Or, if the amount you plan to spend is more than is on hand, Manager can tell you how much you need to find from another source. But it can only do that if negative balances are allowed. Accounting systems don’t stop us from making mistakes. (The empty cash box might, or our bank might.) Accounting systems give us the knowledge we need to avoid mistakes. And, of course, they can make it harder for someone who wants to do something improper to fool others.
Thank you Tut for your reply. I do not want to indulge in unnecessary debate. I would just like to inform you that if u r aware of SAP ERP system, which is world renowned state of the art program applies control over negative cash and inventory balance, provided it is intentionally done otherwise by the client.
You cannot create sales order or create sales transaction if you do not have sufficient inventory. Same is the case with Cash if you do not have sufficient balance as per your record (though you have real physical money in your pocket to pay) system will not allow you to save transaction.
Try to create sale transaction based on negative inventory or purchase transaction based on negative cash balance, see the impact on profitability. Income Statement will be overstated or your liabilities will be understated.
Any way you are just talking about bookkeeping which is part of accounting system in which checks and balances is one of the tool. see this http://misscpa.com/difference-between-bookkeeping-and-accounting/
Instead of creating negative cash it is better to create liability which shows correct scenario of company.
Best regards
@Dilshad, I appreciate your points. Yes, I am well aware not only of SAP but of other ERP systems and the many things they can do. That of course includes human resource planning, shipping and receiving, and other spheres of influence, depending on which modules you buy. But the key is to understand what they are: Enterprise Resource Planning tools. Some will, in fact, write the checks, verify inventory, and enforce a wide range of oversight functions on employees to avoid mistakes. In most, though, “accounting” is just one module among several.
Note Manager’s home page tag line: “…free accounting software for small business.” If a company needs the capabilities of an integrated ERP system, by all means it should use one. Likely, it will pay handsomely for it. @lubos and NGSoftware are providing a much simpler, but still highly useful and valuable, tool for those who do not through a creative “freemium” business model. Part of the model includes crowdsourcing of ideas for improvement, support among members through this forum, and an extraordinary level of responsiveness on bugs, etc. So welcome to our community! 
I will never use an ERP that doesn’t allow for negative balances. A good ERP will rather ask you whether you would like to be warned on negative cash balances. Or highlights negative balances. An example is Tally ERP accounting which can be configured to warn on negative cash/bank balances.
A good application allows for many manipulations for example editing transactions. Every ledger can be negative or positive it a fundamental requirements (to hell with SAP ERP) we learnt that way back in school.
I really want manager to stay as it is.
Those are just business rules you can (probably) set on SAP. There are plenty of businesses who actually do make sales of inventory before purchasing it. Think of many online shops who don’t hold any stock, yet they have thousands of items for sale.
Manager can handle negative inventory without any issues.
Not to mention, even if you avoid negative inventory, every accounting software must support it anyway. Think of cash-basis reports. You might be purchasing inventory before selling, but then on cash-basis you might receive money from customer before paying supplier and there you go… negative inventory situation again.
I thank you all for a very constructive discussion. The last reply by @lubos is very clear and has removed my doubts, because my most of the business is cash basis. Even in SAP it is set as default, which can be changed as per need. Probably, they know that certain types of business do need to have negative balance. By the way this restriction is only in Cash Accounts and Inventory Accounts, all other GL Accounts can have negative balances.
Thanks again all for your support it is SOLVED.
Best regards