Deposit In Transit

DEFINITION of 'Deposit In Transit'

A deposit in transit is money that has been received by a company and sent to the bank, but which has not yet been processed and posted to the account by the bank. In financial accounting, these deposits are reflected in the company's cash balance on the day the deposit is received, even though it may take the bank several days to process the deposit and post it to the balance.

BREAKING DOWN 'Deposit In Transit'

In order to construct accurate financial statements, accountants must often reconcile timing differences caused by factors such as deposits in transit. For example, a company may receive a $10,000 deposit in its bank account on December 31. However, the bank may mark the deposit as "pending" and not increase the account's balance by the $10,000 until it has finished processing it, several days later. Now suppose the company needs to report its cash balance as of the year end. In this case, it is proper to count this $10,000 deposit in transit as being in cash as of the year end, even though the bank did not post it to the balance until later.

RELATED TERMS
  1. Bank Deposits

    Money placed into a banking institution for safekeeping. Bank ...
  2. Call Deposit Account

    A bank account for investment funds that offers the advantages ...
  3. Deposit Interest Rate

    The interest rate paid by financial institutions to deposit account ...
  4. Brokered Deposit

    A large-denomination bank deposit that is sold by a bank to a ...
  5. Core Deposits

    The deposits made in a bank's natural demographic market. Banks ...
  6. Foreign Deposits

    A deposit made at, or money put in to, domestic banks outside ...
Related Articles
  1. Personal Finance

    What is a Demand Deposit?

    A demand deposit is any type of account where the money in the account may be withdrawn at any time without prior notice to the financial institution.
  2. Investing

    Banking: Making Deposits

    By Amy FontinelleMaking deposits is a key part of having a checking account. If you don't make deposits, your checking account will eventually run out of money and you won't be able to use it ...
  3. Personal Finance

    Explaining Term Deposits

    A term deposit (more often called a certificate of deposit or CD) is a deposit account that is made for a specific period of time.
  4. Investing

    What is a Bank?

    A bank is a financial institution licensed to receive deposits or issue new securities to the public.
  5. Markets

    Why Banks Don't Need Your Money to Make Loans

    Contrary to the story told in most economics textbooks, banks don't need your money to make loans, but they do want it to make those loans more profitable.
  6. Personal Finance

    Find the Best Savings Account Rates

    You know how to spot the highest interest rate, but how do you really get the best deal on savings accounts?
  7. Managing Wealth

    TD Ameritrade Thinkorswim: Account Types And Minimum Deposits

    By Cory Mitchell Investors and trades can use the thinkorswim platform using a number of different TD Ameritrade account types. Individual and Joint accounts No minimum deposit, but to ...
  8. Retirement

    The History Of The FDIC

    Find out why this corporation was developed and how it protects depositors from bank failure.
  9. Markets

    What is Fractional Reserve Banking?

    Fractional reserve banking is the banking system most countries use today.
  10. Investing

    Analyzing A Bank's Financial Statement

    Investors should analyze a bank’s interest rate risk and credit risk when analyzing its financial statement.
RELATED FAQS
  1. What proportion of my income should I put into my demand deposit account?

    Find out how much money to keep in your liquid demand deposit accounts, such as checking or savings accounts, and discover ... Read Answer >>
  2. How liquid are money market accounts?

    Understand the characteristics that distinguish money market accounts from checking, savings account and money market funds ... Read Answer >>
  3. What is the difference between the deposit multiplier and the money multiplier?

    Explore the deposit multiplier and the money multiplier, two fundamental concepts of Keynesian economics, and learn how they ... Read Answer >>
  4. Why is my 401(k) not FDIC-Insured?

    Learn about the Federal Deposit Insurance Corporation (FDIC) and whether its protection extends to 401(k) accounts or just ... Read Answer >>
  5. How do you calculate payback period using Excel?

    Understand the various fees that can be assessed on a personal or business checking account, and learn methods to avoid being ... Read Answer >>
  6. Why are CDs (Certificate of Deposit) FDIC-insured?

    Find out why certificate of deposits (CDs) are insured by the FDIC and what the deposit requirements are for receiving insurance ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center