 Hello, in this lecture we will define deposits in transit. According to fundamental accounting principles, while 22nd edition, the definition of deposits in transit is, deposits recorded by the company but not yet recorded by its bank. So these are deposits that we know that we have made. Generally, we've put them in the bank in some format. However, the bank has not yet processed them. Therefore, on our books, we have put them into the our books. We know that if deposit has been made, we have increased our accounts by the deposit. However, they have not yet cleared the bank. If we're doing a bank reconciliation, then we may have these deposits that have not yet been cleared. Those being a timing difference, those being something that we will have to reconcile for within the bank reconciliation. For example, if we did the bank reconciliation here, we'd have a bank statement. This is supposed to be a bank statement from the bank, beginning balance, ending balance, bank summarizing the activity that has happened. If we check that off compared to what we have on our books, we should be able to match everything out except for items that we need to then enter into our books. So maybe these items have not been entered into our books yet. We would then have to make some type of adjustment for that. What we wouldn't make a journal entry for are those items that are differences, that are timing differences, outstanding checks, outstanding deposits. So in this case, we had a deposit made as of the end of the month. That amount should clear, but it didn't clear in February, although we deposited it in February. It's going to clear in March because of that processing time. That will be the reconciling item for our bank reconciliation. Therefore, when we take a look at the bank reconciliation, we will have an adjustment for outstanding checks, and we'll have an adjustment for that outstanding deposit as well, and that will reconcile from the bank balance to our book balance, including that deposit as a reconciling item.