Deposits in Transit
Financial Dictionary — Cash Management & Banking
Definition
Deposits in transit are deposits recorded in the entity’s bank ledger that have not yet appeared on the bank statement at the reconciliation date.
Detailed Explanation
They usually arise from differences in processing or cut-off times. In a reconciliation starting from the bank statement balance, they are added to that balance. Supporting deposit records and subsequent bank credits should be checked.
Common Uses
Used in period-end bank reconciliations and verification of deposits recorded close to the reporting date.
Practical Example
A company records a cash deposit of AED 12,000 on 31 December, but the bank statement shows the credit on 1 January. It is a deposit in transit at 31 December.
Why This Term Matters
Explains timing differences while directing attention to deposits that remain uncredited for an unusual period.