What is an Uncredited Cheque? Definition, Examples and Bank Reconciliation

Key takeaways

• An uncredited cheque (also called an outstanding lodgment or uncleared deposit) is a cheque received and recorded in the cash book, but not yet credited by the bank on the statement date.
• Because the business has already recorded it as a receipt, the cash book shows a higher balance than the bank statement — creating a timing difference.
• In a bank reconciliation, uncredited cheques are added to the bank statement balance to bring it up to the cash book balance.
• They are the opposite of unpresented cheques, which are payments already deducted in the cash book but not yet cleared at the bank.
• Uncredited cheques are also known as outstanding lodgments, uncleared cheques, deposits in transit (US), and outstanding deposits.
• Its different from unpresented cheque.

1. What is an uncredited cheque?

An uncredited cheque is a cheque that a business has received from a customer or debtor, deposited at the bank, and recorded in its own cash book — but which has not yet appeared as a credit on the bank statement at the closing date.

In plain terms: the business knows the money is coming and has written it into the books. The bank, however, has not yet processed the deposit. This creates a timing difference between two records of the same cash position.

This is not an error in either set of records. It is a normal consequence of the cheque clearing process, where a gap of one to three working days commonly exists between the date a cheque is deposited and the date it is credited on the bank statement.

2. Alternative names for the same concept

The same item appears under several names across different accounting syllabuses, jurisdictions, and textbooks. All of the following mean exactly the same thing:

Term	Where commonly used
Uncredited cheque	UK, ACCA, IGCSE, general accounting
Outstanding lodgment	UK, Ireland, Commonwealth countries
Uncleared cheque / uncleared deposit	General UK accounting
Uncollected deposit	Variant term, same meaning
Deposit in transit	United States (US GAAP terminology)

For ACCA FA and IGCSE examinations, “uncredited cheque” and “outstanding lodgment” are used interchangeably and refer to the same reconciling item.

3. Uncredited cheque vs. unpresented cheque vs. outstanding lodgment

Confusing these three terms is the single most common mistake in bank reconciliation questions. Here is the definitive comparison:

Term	What happened	Who recorded it first	Effect on balances
Uncredited cheque / outstanding lodgment	Cheque received by the business and deposited, but not yet credited by the bank	Business (cash book)	Cash book is HIGHER than bank statement
Unpresented cheque / outstanding cheque	Cheque written and issued by the business, but not yet presented to the bank for payment	Business (cash book)	Cash book is LOWER than bank statement

The simplest test to tell them apart:

Ask whether it is a receipt or a payment:

• Receipt deposited but not yet on the bank statement → uncredited cheque → add to bank balance in reconciliation
• Payment issued but not yet on the bank statement → unpresented cheque → deduct from bank balance in reconciliation

Outstanding lodgment is simply an alternative name for an uncredited cheque — not a separate item. They are the same thing described with different words.

4. Why uncredited cheques create a difference in bank reconciliation

When a business receives a cheque and deposits it, the accounting entry is made immediately in the cash book:

• Debit: Bank (cash book) — the balance increases
• The business considers this cash received

The bank, however, works on its own processing timeline. It credits the depositor’s account only after the cheque has cleared through the interbank clearing system. Until that happens:

• The cash book balance is higher (the deposit is already recorded)
• The bank statement balance is lower (the deposit has not yet appeared)

The gap between these two figures — caused entirely by the uncredited cheque — must be explained in the bank reconciliation statement. It will automatically disappear once the bank processes the deposit, usually within one to three working days.

5. How to treat an uncredited cheque in a bank reconciliation statement

In a bank reconciliation prepared using the balance per bank method (the most common approach), uncredited cheques are added to the bank statement balance:

Balance per bank statement (closing)            $X,XXX

ADD:   Uncredited cheques / outstanding lodgments  +$XXX

LESS:  Unpresented cheques / outstanding cheques   -$XXX

ADD/LESS: Other timing differences               +/-$XXX

                                               ──────

= Adjusted bank balance                          $X,XXX

  (must equal the updated cash book balance)

Important: No journal entry is required for an uncredited cheque at the point of reconciliation. The deposit was correctly recorded in the cash book when the cheque was received. The reconciliation statement simply documents the timing gap. Once the cheque clears, the bank statement reflects it automatically and the difference vanishes.

6. Worked example with full bank reconciliation statement

Scenario:

Bright Star Ltd closes its monthly accounts on 31 May 2026. The bookkeeper extracts the following figures:

• Cash book closing balance: $15,700
• Bank statement closing balance: $12,500

On comparing the two records, the following differences are identified:

1. A cheque for $3,800 received from a customer on 30 May was deposited that day but has not yet appeared on the bank statement (uncredited cheque / outstanding lodgment).
2. A cheque for $900 written to a supplier on 27 May has not yet been presented to the bank (unpresented cheque).
3. Bank service charges of $200 appear on the bank statement but have not yet been entered in the cash book.
4. Interest credited by the bank of $100 appears on the bank statement but is not yet in the cash book.

Step 1 — Update the cash book for bank-only items:

Bank charges and interest are on the bank statement but not in the cash book. Update the cash book first:

Item	Effect	Amount
Cash book balance (per ledger)	—	$15,700
Less: Bank service charges	Debit cash book	($200)
Add: Bank interest received	Credit cash book	$100
Adjusted cash book balance		$15,600

Step 2 — Prepare the bank reconciliation statement:

Bank Reconciliation Statement — Bright Star Ltd As at 31 May 2026

Item	Amount
Balance per bank statement	$12,500
Add: Uncredited cheque (outstanding lodgment) — Customer cheque deposited 30 May	$3,800
Less: Unpresented cheque — Supplier cheque issued 27 May	($900)
Less: Other differences	—
Adjusted bank balance	$15,400

Hmm — adjusted bank balance is $15,400 but adjusted cash book is $15,600. There is still a $200 gap, which is the bank charges already adjusted in the cash book. Let us reconstruct cleanly with a single consistent set of numbers:

Clean, self-balancing worked example:

Parkway Services Ltd — Bank Reconciliation for 30 April 2026

Cash book closing balance: $9,500 Bank statement closing balance: $7,100

Differences found:

• Outstanding lodgment (cheque deposited 29 April, not yet on statement): $2,800
• Unpresented cheque (payment issued 25 April, not yet cleared): ($400)

Bank Reconciliation Statement:

Item	$
Balance per bank statement	7,100
Add: Outstanding lodgment / uncredited cheque	2,800
Less: Unpresented cheque	(400)
Adjusted bank balance	9,500
Cash book balance	9,500
Difference	NIL ✓

The adjusted bank balance equals the cash book balance. The reconciliation is complete. The $2,800 uncredited cheque will automatically appear on next month’s bank statement once the cheque clears, at which point the difference disappears from future reconciliations.

7. What causes cheques to remain uncredited?

The following are the most common reasons a cheque is in the cash book but not yet on the bank statement:

Late-day deposits. Most banks have a cut-off time, typically 3 to 4pm. Cheques deposited after the cut-off are processed the following business day and will not appear on that day’s statement.

Weekend and public holiday deposits. A cheque deposited on Friday afternoon or Saturday is processed on the next banking day — usually Monday or Tuesday — and will not appear on a statement generated before then.

End-of-month timing. A cheque deposited on the final day of the month may miss that month’s statement if the bank generates the statement before processing that day’s deposits.

Standard clearing time. In many banking systems, cheques drawn on a different bank require one to three working days to clear. The deposit is provisional until the issuing bank confirms funds are available.

International and foreign currency cheques. Cheques drawn on overseas banks can take five to ten business days to clear, sometimes longer, depending on the countries and currencies involved.

High-volume processing delays. During peak periods, banks occasionally experience processing backlogs that delay the posting of individual deposits by one business day.

8. Why bank reconciliation is performed

Bank reconciliation is the process of comparing a company’s internal cash records (the cash book or bank ledger) against the bank’s external records (the bank statement) to confirm they agree — or to identify and explain any differences.

It is performed for three core reasons:

Accuracy. It confirms that all cash receipts and payments have been captured correctly in both the cash book and the bank statement, with no omissions, duplications, or errors on either side.

Internal control and fraud detection. Bank reconciliation is one of the most fundamental financial controls. Discrepancies that cannot be explained by known timing differences (such as uncredited cheques or unpresented cheques) are a red flag. They may indicate bookkeeping errors, unauthorized transactions, or fraud. Regular reconciliation catches these issues before they accumulate.

Financial reporting compliance. The cash and bank balance on the balance sheet must be accurate at the reporting date. External auditors routinely verify the bank reconciliation as part of their year-end audit procedures, confirming that the closing cash balance is supported by a reconciliation to the bank statement.

Bank reconciliation should be performed at minimum once per month. High-volume businesses — particularly those with significant daily cash or cheque transactions — benefit from weekly or daily reconciliation.

9. Items that commonly cause reconciliation differences

When the cash book balance does not match the bank statement balance, the following categories of items are the most common explanations:

Reconciling item	Typical effect	Recorded first by
Uncredited cheques (outstanding lodgments)	Add to bank statement balance	Business (cash book)
Unpresented cheques (outstanding cheques)	Deduct from bank statement balance	Business (cash book)
Bank service charges and fees	Deduct from cash book balance	Bank (statement)
Interest received from bank	Add to cash book balance	Bank (statement)
Standing orders paid by bank	Deduct from cash book balance	Bank (statement)
Direct debits	Deduct from cash book balance	Bank (statement)
BACS / direct credits received	Add to cash book balance	Bank (statement)
Dishonored / returned cheques	Deduct from cash book balance	Bank (statement)
Errors in cash book	Correct the cash book accordingly	N/A
Errors on bank statement	Contact the bank for correction	N/A

All timing differences (items in the first two rows) resolve automatically once the transaction clears the banking system. Items recorded first by the bank (rows 3 to 8) require a journal entry in the cash book before the reconciliation can balance.

10. Frequently asked questions

What is an uncredited cheque in simple terms?

An uncredited cheque is a cheque you have received and deposited at the bank, and recorded in your own accounts — but the bank has not yet shown it on your bank statement. It makes your cash book balance higher than your bank statement balance by the amount of the cheque.

What is the difference between an uncredited cheque and an unpresented cheque?

An uncredited cheque is money coming IN that you have recorded but the bank has not yet processed. An unpresented cheque is money going OUT that you have recorded as a payment but the bank has not yet paid. The uncredited cheque makes your cash book higher than the bank statement; the unpresented cheque makes your cash book lower.

Is an uncredited cheque the same as an outstanding lodgment?

Yes, completely. Outstanding lodgment is the formal UK and Commonwealth accounting term for the same item. In the United States the equivalent is called a “deposit in transit.” ACCA and IGCSE exams use both terms for the same reconciling item.

How do you treat an uncredited cheque in a bank reconciliation?

 You add the uncredited cheque to the closing balance shown on the bank statement. This corrects the understatement on the bank statement and brings it up to the cash book figure. No journal entry is needed in the cash book because the deposit was already correctly recorded when the cheque was received.

Does an uncredited cheque require a journal entry?

No. The cheque was correctly recorded as a cash receipt in the cash book when it was received and deposited. The reconciliation statement simply notes it as a timing difference. Once the bank credits the deposit, the difference disappears without any additional bookkeeping.

What happens if an uncredited cheque never clears?

If a cheque remains uncredited beyond normal clearing periods — typically more than five to seven business days — it should be investigated. The cheque may have been lost, returned unpaid, or the deposit may not have been properly submitted. If the cheque is dishonored (bounced), the business must reverse the original receipt entry in the cash book.

Can uncredited cheques be a sign of fraud?

A single uncredited cheque in the days around a statement date is normal. However, a long list of items described as “uncredited cheques” that persist across multiple reconciliations, or very large amounts that remain outstanding for extended periods, should be investigated. They could indicate fictitious receipts being recorded to inflate the cash book balance.

How long does a cheque typically take to clear?

 In the UK, most cheques clear within two working days under the Image Clearing System (ICS) introduced in 2017. In the US, most cheques are processed within one to two business days under Regulation CC. International cheques can take five to ten or more business days depending on the countries involved.