Knowledge is key when building a business or team. A great way to build knowledge can start with incorporating your business history and important facts and definitions within the company policies and procedures. Management will see it build company awareness and team cohesiveness. Just know, it's never to late to start. Below is a financial definition and example:
An outstanding deposit refers to a company's receipts (cash, checks from customers, etc.) which have been recorded by the company, but the amount will appear on its bank statement at a later date. An outstanding deposit is also known as a deposit in transit.
To illustrate an outstanding deposit, let's assume that on October 31 a company received cash and checks from customers in the amount of $800. Clearly the company should report the $800 as part of its cash as of October 31. However, the company did not deposit the $800 into its bank account until after October 31. Since the $800 is not on its bank statement as of October 31, the $800 is described as an outstanding deposit or deposit in transit as of October 31.
The $800 outstanding deposit is pertinent to the company's bank reconciliation as of October 31. When the company reconciles the bank statement, the outstanding deposit is an addition to the balance shown on the bank statement as of October 31. (There is no adjustment to the balance per books since the $800 had been recorded as of October 31.)
Understanding how receipts should reflect in your business financials is important for business owners when they want to know how much cash they have on-hand or available.
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