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M
MB_W
November 3, 2024
Solved

Undeposited funds account at month end

  • November 3, 2024
  • 1 reply
  • 0 views

We have been using QuickBooks Online Plus for a short time. We are using cash accounting. This month end, there is a small amount in the Undeposited Funds account which shows up on the balance sheet. It represents 3 checks we received near the end of the month, which were not deposited into our bank account until the beginning of the next month. Is it proper accounting (under cash accounting) to show this "Undeposited funds" on our balance sheet under Current Assets? Or should we eliminate this amount using a journal entry and not reflect the income until we have made the deposit? Thanks. 

Best answer by Rainflurry

@MB_W 

 

You can leave it in Undeposited Funds with a corresponding amount as income.  Income is recorded when you have "constructive receipt" of the funds, not when you make the bank deposit.  You certainly have constructive receipt if the checks are in your possession.  

1 reply

Rainflurry
RainflurryAnswer
November 4, 2024

@MB_W 

 

You can leave it in Undeposited Funds with a corresponding amount as income.  Income is recorded when you have "constructive receipt" of the funds, not when you make the bank deposit.  You certainly have constructive receipt if the checks are in your possession.  

M
MB_WAuthor
November 4, 2024

Thank you so much. That was my assumption, but i appreciate your reply to confirm my understanding!

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