diff --git a/erpnext/accounts/report/financial_statements.py b/erpnext/accounts/report/financial_statements.py
index 0339e4920a8..bb33a0025a3 100644
--- a/erpnext/accounts/report/financial_statements.py
+++ b/erpnext/accounts/report/financial_statements.py
@@ -418,6 +418,7 @@ def set_gl_entries_by_account(
 			where company=%(company)s
 			{additional_conditions}
 			and posting_date <= %(to_date)s
+			and is_cancelled = 0
 			{distributed_cost_center_query}
 			order by account, posting_date""".format(
 				additional_conditions=additional_conditions,