In certain cases, you would receive money from your customers which needs to be deposited into bank accounts. The Undeposited Funds account is used to track and record such amounts.
Both the Undeposited Funds and Petty Cash accounts are used to record cash related transactions. However, the Petty Cash account is used exclusively to record daily expenses or income from business operations.
For example, post-dated cheques etc.
One solution for your accounting and GST filing needs