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View Full Version : Booking deposits in transit at year end


pencilpusher
Dec 9, 2008, 11:55 AM
Why would a CPA book deposits in transit at year end? Is it to recognize revenue early so you can write it off against expenses? How come there is a loss to follow in the following year?

pready
Dec 10, 2008, 03:57 PM
Deposits in Transit are Deposits that have been made by a company to a financial institution such as a bank that has not been recorded at the financial institution. It has nothing to do with revenues or expenses.

When you receive a paycheck and deposit it at the bank you record the deposit to your records. If the deposit was made at the end of the month and it does not show on your monthly bank statement, then the deposit it a deposit in transit.

A deposit in transit is a timing difference between you recording a deposit and the bank recording the deposit and is added to the bank balance when doing your monthly bank reconcilliation.