One of the most common question I get is “What is undeposited Funds?” When you receive a payment from a client it goes into an account called undeposited funds. Think of this as your bank bag. You may receive payments from clients throughout the week. You stick them in your bank bag.
You do the same thing in QuickBooks. When you are ready to go to the bank you click on Record Deposits from the Home Page. A window will pop up for you to select the payments you are depositing into the bank.
Now you select the bank account you are depositing the money into.
Undeposited Funds is just a holding account to place all the checks or cash you have received so you can group them together to make a deposit into your bank account.
Hope this helps.