Deposits in transit
In one sentenceAmounts the business deposited and recorded in its books near the end of the period, but that appeared on the bank statement only in the following period.
Simply put
It usually happens when the last day's sales are deposited after working hours, or a cash deposit is processed the next day. The amount is not missing; it is on its way to the account.
In the reconciliation you add it to the statement balance, then make sure it appeared in the first days of the next month's statement.
Worked example
A restaurant deposited its sales of 31 December, 20,000 SAR, in the evening, and they appeared on the statement on 1 January. The statement balance on 31 December is 130,000 SAR, and the book balance is 150,000 SAR.
Balance per statement130,000
+ Deposit in transit20,000
Balance per books150,000
Adjusted statement balance = 130,000 + 20,000 (matches the books)150,000 SAR
Don't confuse it with
Checks under collectionBoth are added to the statement, but a deposit in transit is cash or a transfer whose posting was delayed, while a check under collection is waiting to be collected from another bank.