Accounting Dictionary

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Deposit in Transit

Definition: A deposit in transit is cash and/or checks that have been received and recorded by an entity, but which have not yet been recorded in the records of the bank where the entity deposits the funds. If this occurs at month-end, the deposit will not appear in the bank statement, and so becomes a reconciling item in the bank reconciliation.

A deposit in transit occurs when a deposit arrives at the bank too late for it to be recorded that day, or if the entity mails the deposit to the bank (in which case a mail float of several days can cause a delay), or the entity has not yet sent the deposit to the bank at all.

For example, on April 30, ABC Corporation receives a check from a customer in the amount of $25,000. It records the check as a cash receipt on the same day, and deposits the check at its bank at the end of the day. The bank does not record the check in its books until the following day, May 1.  Thus, when ABC's controller completes the month-end bank reconciliation, she should add $25,000 to the cash balance shown on the bank statement in order to have it match the cash balance shown in ABC's accounting records.