Timing differences Updated November 2026

Deposits in transit

A deposit in transit is a deposit the company has recorded in its cash book but the bank has not yet posted, usually because it was made at the end of the month or after the bank's cutoff. Add it to the bank statement balance in the reconciliation; no journal entry is needed.

Syntax

Deposits in transit = Deposits recorded in books - Deposits shown on bank statement (for the period, after removing last month's DIT)

Part	What it is
`Side`	Bank side, add
`Journal entry`	None; the books are already correct
`Follow-up`	Must appear on the next statement; if not, investigate the deposit

Examples

Cash book deposits in March: 2,000; 1,500; 800 (Mar 31)
Bank statement deposits in March: 2,000; 1,500

Result: Deposit in transit 800. Adjusted bank balance = statement balance + 800.

Statement balance 3,200; deposit in transit 800; no outstanding checks
Book balance 4,000

Result: 3,200 + 800 = 4,000, equal to the books. Reconciled with no entry.

Last month's deposit in transit 500 appears on this month's statement; this month's late deposit is 650

Result: Only 650 is a deposit in transit now; the 500 cleared and drops off.

Common mistakes

Adding the deposit to the books again when it shows on the next statement: it was already recorded; just tick it.
Treating a deposit dated next month as in transit for this month: it is not in this month's books either.
A deposit in transit that never arrives: a lost or misdirected deposit is not a timing difference; chase the bank.

Practice Deposits in transit

These drills check your answer on live data, free, no account needed.

A deposit the bank has not seenClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.
End of month rushClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.
Last month's depositLast month's outstanding items are listed separately. Classify them too, then every line, and enter both adjusted balances.

Questions

Why is a deposit in transit added to the bank balance?

The bank balance is too low because the bank has not yet credited money the company already counted. Adding it brings the bank figure up to the true balance.

Does a deposit in transit affect the cash balance on the balance sheet?

No. The book balance already includes it, and the balance sheet uses the adjusted book balance.

Outstanding checksAn outstanding check has been written and recorded but has not cleared the bank. Subtract the total from the statement balance and carry unpaid ones forward.
Adjusted bank balanceAdjusted bank balance = statement balance + deposits in transit - outstanding checks, plus or minus bank errors. Worked examples with exact results.
Prior month outstanding checksHow last month's outstanding checks and deposits in transit roll into this month's bank reconciliation: remove those that cleared, keep those that did not.
CutoffCutoff means every transaction is recorded in the period it belongs to: sales when goods ship, purchases when received. How to test cutoff and fix an error.