Thank you Jevee -

I have two follow-up questions. 

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I have completely reset QBO and now have a Cash Box account (which is mirrored by an actual cash box) that has the starting balance = the current contents of our physical cash box.

Thus, I now have two accounts for cash funds in my Chart of Accounts -

   Undeposited Funds (which is currently empty)

   Cash Box (Bank/Cash on Hand) which reflects the petty cash balance in the physical box.

Our process is as follows: Our Sunday collection has two components - general cash donations; and cash Pledge payments in envelopes.

The Pledge payments are individually posted in QBO under "Receive Payments".  The total cash donation for the service is posted in QBO under Sales Receipt.  Then all the cash goes in our cash box.  When the amount in the cash box reaches a certain threshold, we deposit the money in the bank.

Both the "Receive Payment" form and the "Sales Receipt" form have a "Deposit To" box that must be completed.

There are two possible account choices in the Deposit To drop-down menu:

Undeposited Funds or Cash Box.

My understanding is that initially I want to put the funds in the Undeposited Funds account.  This keeps the QuickBooks accounts 'clean' and keeps information where QuickBooks needs it for accurate reporting.

1) Is the above in bold correct?

2) Next and final (I hope) question about this topic:

                          Do I want to make bank deposits from Undeposited Funds, or do I want to transfer from Undeposited Funds to the Cash Box account (which would reflect our physical reality) and execute Bank Deposits from there?????  In other words, going forward, where in QuickBooks should our physical cash box contents be reflected?

Sorry for my confusion.

Ted