The article provides information about how undeposited funds account works and the tasks associated with it.
The first time you receive payments, use a payment item on an invoice, or enter a sales receipt, QuickBooks Desktop creates the Undeposited Funds account which serves as your default deposit to account for all subsequent payments. This is an internal account that QuickBooks Desktop use to hold funds until you are ready to deposit them.
When you use Undeposited Funds:
When you do NOT use Undeposited Funds:
To change your setting for depositing customer payments:
You may have deposited a customer's check and then recorded a separate Payment. This will overstate your income because income is recorded by both the Invoice and the Deposit. If the Deposit was in a previous accounting period and cannot be changed, you can remove the Payment from the Payments to Deposit window. Create a zero deposit using the overstated income account.
Before removing payments from the Undeposited Funds account, make sure to:
Once a transaction from the Undeposited Funds account has been deposited, QuickBooks Desktop will automatically clear the transaction in the Undeposited Funds register. If you need to see which payments have not been cleared/deposited yet, you can customize the Undeposited Funds Quick Report.