Dictionary / Demand Deposit
What does Demand Deposit mean in accounting?
Quick definition
Cash & bankingA deposit in a financial institution, such as a bank, that may be withdrawn without notice; a commercial checking account. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
Read more below
Examples
Customer ACH lands in operating checking
You run a bicycle shop. On May 12 a parks district pays a $1,890 invoice by ACH into operating checking at your bank, and you can pay a parts supplier that afternoon with no hold and no maturity date. That balance is a demand deposit: a commercial checking account you withdraw without notice. In QuickBooks Online, match the bank-feed line for Checking to Receive payment so Checking rises $1,890 and accounts receivable drops. Do not park the inflow in Other Current Asset just because the statement says "deposit."
A locked CD is not this account
You run an HVAC shop. On October 3 you sweep $18,500 of leftover service-call cash into a 9-month certificate at the bank, which you cannot withdraw without notice (break it early and you forfeit interest). That is a time deposit, not a demand deposit. In QuickBooks Online or Xero, keep the $18,500 off the Checking account the bank feed uses and open a separate asset, so the October 31 balance sheet does not treat locked CD cash as spendable operating money. Everyday checking is still the demand deposit; the certificate is not.
Why it matters
A demand deposit is commercial checking: cash at a bank you can withdraw with no notice. You use it every week for payroll, vendor ACH, and the bank feed in QuickBooks Online or Xero. Treat a CD, a time deposit, or a savings hold as the same thing and cash on the balance sheet looks spendable when it is locked. This line is only the withdraw-anytime bank balance, not the whole current asset group (that also holds accounts receivable and inventory) and not a current investment in temporary securities; keep operating checking on its own account so you can see what you can actually spend.
Keep learning
Start with the bookkeeping basics, then compare software when you are ready to pick a tool.
Getting startedBookkeeping basics for small-business ownersWhat bookkeeping is, the records you need, double-entry in plain English, and a monthly rhythm that fits a 1–50 person shop.Updated October 4, 2026
RolesWhat does a bookkeeper do?A bookkeeper records bills, invoices, and bank activity so your books stay current. See the weekly work, the month-end close, and what they do not do.Updated August 18, 2026
Monthly closeMonthly bookkeeping: what to close each monthMonth-end is the job: reconcile banks and cards, age bills and invoices, check payroll, then read the reports. A close checklist for small-business owners.Updated August 18, 2026
Receipt CaptureThe 7 Best Receipt Capture Tools for Small BusinessThe 7 best receipt capture tools for small business, ranked: OCR accuracy, QuickBooks and Xero sync, real pricing, and honest tradeoffs for each pick.Updated August 9, 2026Frequently asked questions
What is Demand Deposit in bookkeeping?
A deposit in a financial institution, such as a bank, that may be withdrawn without notice; a commercial checking account.
When should I use Demand Deposit?
Use Demand Deposit when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Demand Deposit?
Demand Deposit is used for demand deposit entries, while Daybook covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.