Deposits in transit have been recorded on the companys books

Deposits in transit have been recorded on the company\'s books but not yet by the bank. have been recorded by the bank but not yet by the company. have not been recorded by the bank or the company are checks from customers which have not yet been received by the company

Solution

The correct answer would be the first option or

Deposit in transit have been recorded on the company\'s books but not yet by the bank.

Deposit in transit can be defined as the cash which is received by the company and recorded in its books however such receipt will not reflect in the bank account until a specific time period has elapsed.

For example - A store has the practice to deposit the cash received by it during the end of the day in a bank. Consider a scenario when it is the last day of the month of January and the store as usual made the deposit at end of the day. The cash deposited at the last day of January will be recorded in the books of the company as deposited to bank in January. However as banks require time to process the deposists and reflect in the bank account the transaction will not reflect in January end. It will reflect in 1st or 2nd February in the bank account.

Therefore Deposit in transit can be said to be Cash that have been recorded on the company\'s books but not yet by the bank.