Undeposited Funds is a special account in QuickBooks Online. It works the same as in the desktop edition of QuickBooks.
That may not help you though because most QuickBooks Online users have not used the desktop edition before. It also may not help because everything looks so different. In our course called “Cloud Accounting With QuickBooks Online” I am going to give you a very thorough look at how to do everything there is to do for most businesses, including how the undeposited funds account works. Meanwhile I thought it would be nice to do the QuickBooks Online version of something I’ve covered extensively with regard to the desktop edition. Here are The Secrets of the Undeposited Funds Account in QuickBooks Online.
The process is simple. What happens in QuickBooks should mirror what happens in the real world. So if I get 6 checks that I am going to deposit together then I should group those checks together before I deposit them in QuickBooks. This is what the undeposited funds account is for and it works the exact same way in QuickBooks online as it works in the desktop edition. You’ll still find the undeposited funds account on the balance sheet and you still won’t see it included on the statement of cash flows because it is treated same as cash. It’s money you’ve received but you just haven’t gotten it over to the bank yet.
The other example is when you process credit cards. In that case all of the Visa & MC payments I process today will be deposited together in a day or two or three. Then all of the American Express payments I process today will fund together in about a week! Here as well the undeposited funds account allows me the opportunity to group the payments together in a single deposit so that what shows up in my QuickBooks Bank Account register exactly matches what the bank shows on their end.
It isn’t really such a mystery and there really aren’t any secrets. If you haven’t already, watch the video. It’s extremely entertaining and you’ll really understand how the undeposited funds account works in QuickBooks Online.
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