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K
kk16
July 4, 2019
Question

My accountant tells me the undeposited funds account needs to have a zero balance at the end of each month. My question is why?

  • July 4, 2019
  • 2 replies
  • 0 views
My company deposits cheques to the bank weekly every Friday in a bulk run. But the individual cheques are entered throughout the week (as they are received) into the undeposited funds account. I entered one into the undeposited funds with a date of June 28th. It was not included in the cheque run as it was received after, however now it is July and there is a balance in the undeposited funds account when the accountant runs the monthly balance sheet.  My accountant tells me to switch the date on the entry to July 1, so there will be no balance in the undeposited funds account showing in June.  Is this really necessary or is it okay to have a balance in the undeposited funds account at the end of the month since the cheque has been received, yet not deposited.

2 replies

J
JamesM
July 4, 2019

Hi there, 

 

Thanks for posting your question in the Community. 

 

It's important that your transactions and accounts match up with what your accountant suggests. Not only will this make the bookkeeping easier but it also encourages transparency between you and your accountant. That being said, I recommend following your accountant's advice. If you'd like to learn more about the Undeposited Funds account, there's a great article which you can reference. Here's the link to it. 

 

Let me know if you have questions. I'll be happy to help. 

    Z
    Zhaoja1
    March 8, 2021

    My situation is that the undeposited fund shows up at year end balance sheet. However the date made multiple deposits was passed the year end date. I use QBO accountant version. I am not sure how or shall I need to clear up the balance on this account. Could you please give me your advice?

     

     

    M
    MK Vande
    March 8, 2021

    I have undeposited funds, but no funds to deposit.  So I am with you...

    R
    Rochelley
    November 13, 2019

    I'm with you and I disagree with your accountant on this one.  This is the reason there is an undeposited funds account, to hold funds that have been received but not yet deposited to the bank.  In effect, it is another 'bank account' on your balance sheet.  Whether the money is sitting in the undeposited funds account or the real bank account should not matter to anyone.  At least it is showing up somewhere.  Without an undeposited funds account, you wouldn't even track a payment that was received but not taken to the bank yet.  No one would even know you were in possession of those payments without the undeposited funds account.

     

    And no, you should not be changing dates on deposit transactions.  The date on your deposits in QB should match the date the deposit actually went to the bank.  You want to make sure that the register balance on your printed bank reconciliation report actually matches the register balance in QB on that date.  When you start messing with dates of past transactions, you risk having a mess in your reporting.

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