Deposit In Transit

AAA

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.

INVESTOPEDIA EXPLAINS '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. Transit Item

    Any check or draft that is issued by an institution other than ...
  2. Deposit Slip

    A small written form that is sometimes used to deposit funds ...
  3. Direct Deposit

    Electronic funds that are deposited directly into your bank account ...
  4. Routing Transit Number - RTN

    A nine-digit numerical code used to identify a banking or other ...
  5. Balanced Budget

    A situation in financial planning or the budgeting process where ...
  6. ABA Transit Number

    A unique number assigned by the American Bankers Association ...
Related Articles
  1. Tired Of Banks? Try A Credit Union
    Retirement

    Tired Of Banks? Try A Credit Union

  2. Are Your Bank Deposits Insured?
    Savings

    Are Your Bank Deposits Insured?

  3. Inside National Payment Systems
    Economics

    Inside National Payment Systems

  4. Your First Checking Account
    Insurance

    Your First Checking Account

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center