QuickBooks – The Undeposited Funds Account – Demystified
What is the undeposited funds account? I have witnessed firsthand CPA’s who have been completely frustrated with this account. They don’t get it – and some of them are pretty smart!!! Well I’ve learned to break things down simply in order to get them. Perhaps that is why I am able to teach things – I break them down simply, so here goes. The undeposited funds account consists of “funds” or “money” which have not yet been deposited. The implication of course being that I have received them. So I often explain to clients that this account and whatever balance is may show should literally represent the checks sitting on your desk which you have not yet taken to the bank.
Why do we need this account?
When I go to the bank I deposit several checks at once. Then the bank gives me a receipt for the total. This total is what shows up on my bank statement next month. I want QuickBooks to show me the same total in the check register, rather than having the individual checks. Especially when I go to reconcile the statement, if I can’t group the checks as a lump sum deposit I will need to manually sit there adding up the check amounts from the check register to hopefully arrive at the total on the bank statement. A needless waste of time!
How does the undeposited Funds Account help?
The undeposited funds account helps by allowing you to group customer payments together in a “box” so to speak. Then when you go to make a deposit you can check off exactly those payments which you are depositing today, leaving behind any that you will be holding. This way you can tie out to the bank AND QuickBooks lets you print the deposit slip and/or deposit summary showing you exactly what makes up that deposit. Exciting stuff! Really it is! Watch it in action in the video below..
So what if your undeposited funds account shows a balance, but there are no checks on your desk?
Never fear, Nerd is here – Watch the video and I am going to show you exactly how to find out what is in that balance, leaving out the entire history of all of the transactions which have been received and deposited.
Enjoy the web cast: