In transit definition
/What is In Transit in Shipping?
In the shipping industry, "in transit" refers to the movement of goods, documents, or shipments from the point of origin to their final destination. This phase begins once a carrier, such as a trucking company, freight train, cargo ship, or airline, takes possession of the shipment and continues until it is delivered to the recipient. While in transit, goods may pass through multiple checkpoints, including warehouses, distribution centers, or customs clearance if being transported internationally. The status of in-transit shipments can be tracked using logistics systems, GPS, and tracking numbers, providing real-time updates to shippers and recipients. In transit is a key concept in global trade and e-commerce, ensuring that businesses and consumers receive their goods as expected while minimizing losses and inefficiencies.
What is In Transit in Accounting?
In accounting, the term "in transit" refers to transactions that have been initiated but not yet fully processed or recorded in the recipient’s accounts. One common example is deposits in transit, which occur when a company records a deposit in its cash account, but the bank has not yet processed it, creating a temporary discrepancy in the bank reconciliation. This typically happens when deposits are made near the end of a reporting period, such as checks mailed to the bank but not yet cleared or electronic transfers that take time to post. Until the bank processes these deposits, they appear as a reconciling item in the company's bank reconciliation statement, meaning the company’s cash ledger reflects the transaction, but the bank statement does not. Other common "in transit" items include inventory in transit, where goods have been shipped but not yet received, and checks in transit, where issued checks have not yet been cashed by the payee. These transactions are carefully monitored to ensure accurate financial reporting and prevent discrepancies between internal records and external statements.
Example of In Transit
For example, on July 31, Smith Corporation receives a check from a customer in the amount of $1,000. It records the check as a cash receipt on the same day, and deposits the check at its bank at the end of the day. The bank does not record the check in its books until the following day, August 1. Thus, when Smith's controller completes the month-end bank reconciliation, she should add $1,000 to the cash balance shown on the bank statement in order to have it match the cash balance shown in Smith's accounting records.
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In Transit Usage in Transport Services
In transport services, the "in transit" term refers to goods that have left the location at which they were loaded onto a mode of transport, and have not yet reached the location at which they will be offloaded. The goods are still considered to be in transit at any waypoints at which the goods might be shifted onto a different mode of transport.
For example, Smith Corporation loads a pallet of computer parts onto a truck, bound for a customer located in Memphis. Until such time as the goods are delivered to the customer, they are considered to be in transit.
Terms Similar to In Transit
In transit is also known as en route.