Undeposited Funds.

Question:

When receiving a payment that is sitting in the undeposited funds account, how do you then assign to the correct income account when making the deposit?

Answer:

The income account is not determined when you record deposits. The income account is chosen when you create the invoice (each item is assigned an account). When you receive the payments, the A/R is cleared and the amount is put in undeposited funds (This is where you are). The deposit step simply moves the money from undeposited funds to the respective cash account.