What are Undeposited Checks?

Undeposited checks are checks that have been received from customers, but not yet deposited. There are several possible reasons why a business might have undeposited checks, including the following:

The business operates on the cash basis of accounting, and does not want to record any additional income in the current reporting period.
The amount of cash represented by the undeposited checks is so small that the accounting manager does not bother to make a deposit, preferring to instead wait for more checks to arrive.
The checks are post dated, so the entity cannot yet deposit them.

Ideally, undeposited checks should be reported by the recipient in its balance sheet as cash.