If you do this, you’ll end up showing your income as double, which of course, can cause problems for you and your company’s books. To see if this has occurred, check the balance in the undeposited funds account against the balance sheet report. When receiving payments for your sales and deposited them to the undeposited funds, it means that you generate an income and the money received sits on the undeposited funds. Also, you added a bank deposit to your bank account as an income. This means that you’ve recorded an income twice.

It also makes your reconciliations much easier. When you put money in the bank, you often deposit several payments at once. For example, let’s say you deposit five US $100 checks from different customers into your real-life checking account. Your bank records all five checks as one US $500 deposit. So, you need to combine your five separate US $100 records in QuickBooks to match what your bank shows as one US $500 deposit.

To avoid the issue from happening in your future transactions, you can choose the bank account in the Deposit to field if you don’t want to use the Undeposited Funds account. I have many small transactions, so is there a way to make the bank the default in the” deposit to” box so that I do not have to edit all the transactions individually. This would save so much time and essentially wasted effort because all my income is paid directly into the bank and I do not have any real life undeposited funds. The undeposited funds is a negative (-337.11) and the general journal entry won’t let me add in a negative to both accounts. Another way is to create a giant deposit with a negative amount and the correct income account.

  • Let me know and I’ll gladly help you out again.
  • If they match, you should be able to reconcile the deposit successfully, even if it consists of multiple transactions.
  • Select the bank where you want to deposit the funds.5.
  • It is your responsibility to Record In the software what you do in real life.
  • I can help you move those payments from your undeposited funds account, @FlexMgt.

The report will list any transaction that is still in the Undeposited Funds account. Follow step 2 “Make a Bank Deposit” to add these payments to a deposit. Payments from sales receipts are automatically deposited by QuickBooks into the Undeposited Funds account. Create a sales receipt, and QuickBooks will take care of the rest. Now you can select an Undeposited Funds or another account each time you create a sales receipt.

*Undeposited Funds appears in the QuickBooks Desktop Point of Sale chart of accounts

The funds are automatically placed into Undeposited Funds by QuickBooks after you follow the procedures to receive payment for an invoice. Then move onto Step 2 and then deposit the payments. QuickBooks takes care of everything if you process invoice payments with QuickBooks Payments for Desktop. Payments don’t have to be moved to an account or combined. If your bank records a single payment as its own deposit, you don’t need to combine it with others in QuickBooks. Instead, you can put the payment directly into an account and skip Undeposited Funds.

Don’t hesitate to get in touch with us if you need further assistance with managing transactions in QBDT. Do you have other concerns about your reconciliation? Or perhaps you need some assistance in managing other entries or reports? Let me know and I’ll gladly help you out again. Visit me here again in the Community and keep me posted if you need further assistance with your deposits.

  • If you’ve created a payment for the invoice already, you’ll have to match the deposit to the payment instead of adding it.
  • A payment was rung up on the POS and downloaded into QB and shows as an undeposited fund.
  • Then click “Select your file” from your system.
  • I show both the payment and the deposit in the undeposited funds account.
  • To do this, go to “Edit” in the menu, select “Preferences” and then choose “Payments”, which is found in the sub-menu on the left side of the screen.

It is your responsibility to Record In the software what you do in real life. Undeposited Funds is the default temporary holding place for money in. Now look at your bank statement and recreate the deposits that were made in real life.

How to Use Undeposited Funds Accounts in QuickBooks Desktop

When it comes to keeping your finances straight, QuickBooks does a brilliant job of providing simple yet effective tools to see the flow of money in and out of your company. It can be frustrating to correct issues in QuickBooks when they happen, but you can avoid them by using the proper accounts for the proper transactions. If you run into trouble along the way, don’t hesitate to reach out to us. CMP would be happy to help you make the most of your QuickBooks experience and ensure your accounts are up to date and accurate. We provide a vast range of Quickbooks services to suit all your needs. If done properly, the Undeposited Funds balance will zero out to reflect that you no longer have a stack of checks in your possession.


In order to clear the amount in this account, you’ll need to make deposits. Thank you for the additional details about how the deposits were recorded. I’m here to help clear the negative balance in the federal extension Undeposited Funds account. QuickBooks allows you to access almost all types of accounts, including but not limited to savings account, checking account, credit card accounts, and money market accounts.

Payments processed with QuickBooks Payments:

If you send them an electronic/physical copy of the invoice, you could date the invoice in January and, after they receive it, change the date to December. Based on the information you’ve shared, it appears that there’s a bank deposit that was created in the past but wasn’t made from Undeposited Funds. I recommend checking with your accountant on how to go about recording this. “Or just make one giant deposit and drop down a line and enter your income acct. with a minus amount of the total deposit to clear them.  Your net deposit would be zero.” Or just make one giant deposit and drop down a line and enter your income acct. With a minus amount of the total deposit to clear them.

Many people enjoy using QuickBooks because it’s easy to use, has robust features, and can grow with their company. My understanding is that I may not be able to match the amount to of deposit with the records in QBDT. However the problem is that the actual deposit made at the bank itself was for the total of checks… You’ll also notice that when you click on the deposit, it expands and you can choose to edit.

Next Steps: Review your Undeposited Funds account

Allow me to join the thread and share some steps to help you further with the Undeposited Funds (U/F) corrections. Yes, when you deposit the correction to the operating account, it will increase the register’s balance. I’ll be explaining what you’ll need to do to clear out the amounts from the Undeposited Funds account (and how to ensure your reconciled ending balance is correct). I’m happy to hear we were able to help get you back to business. You’re correct, any payments that have already been matched and recorded as deposits can’t be done a second time.