What is a Deposit in Transit?
What is a Deposit in Transit?
A deposit in transit refers to a payment that has been recorded in a company’s accounting books but hasn’t yet cleared the bank. This usually happens when a business deposits cash or checks near the end of a financial period, and the bank processes them later. These deposits appear as reconciling items in a bank reconciliation until they officially show up in the bank statement.
How to Identify Deposit in Transit?
Identifying a deposit in transit during bank reconciliation is all about spotting the timing differences between when you record the deposit in your books and when the bank actually processes it.
Start by reviewing your cash receipt records—whether deposit slips, your POS system, or accounting software. Then, match these against the deposits listed on the bank statement for the same time period.
Next, look for any deposits you’ve recorded but don’t see on the bank statement. These usually show up toward the end of the statement period. That timing lag is the key sign of a deposit in transit—it’s already in your books but hasn’t cleared the bank yet.
Double-check with the bank if anything looks off or if you’re uncertain whether a deposit should’ve cleared by now. Call them or log into your business banking account to confirm whether the deposit is pending, posted, or delayed for another reason.
Deposits in transit are normal, especially if you’re depositing after business hours or over a weekend—they just haven’t shown up in the bank’s records yet. It is important to catch and confirm them so your books are reconciled correctly.
Think of it like ordering something from Amazon. The money is deducted from your account, but the package arrives later.
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FAQs
What is an example of a deposit in transit?
Let’s say your business receives $3,000 in cash and checks on March 31, and you take it to the bank just before closing. You record the deposit in your books on March 31, but the bank doesn’t process it until April 1. That $3,000 is a deposit in transit—it’s been recorded in your records but hasn’t yet shown up on the bank statement for March.
How is a deposit in transit calculated?
There’s no fancy formula—it’s simply the total of all deposits your business recorded in its books before the end of the bank statement period that doesn’t appear on that bank statement. You compare your recorded deposits to the deposits listed by the bank and flag any that haven’t cleared yet. Those unmatched amounts are your deposits in transit.
What is another name for a deposit in transit?
A deposit in transit is sometimes referred to as an “outstanding deposit” or “uncredited deposit”—terms that mean the same thing: money you’ve recorded that the bank hasn’t yet processed or posted.
