"In the past I would enter sales commissions in the check register."
I don't know if this means it is Inflow or outgoing?
That means you are not entering this as income or expense using actual Transactions in the names of customers and vendors, but just "doing the banking" and that means you are using about 5% of the functionality of the program.
"I've read and watched tutorials on how to do this well using accounting principles and as Quickbooks intended it."
Good for you. Look at your Home Page, There are the workflows. Look at the Menus. There are your tools.
"The company preferences are set to deposit to undeposited funds by default."
You control this setting. There are about 200 preferences you shoudl review and set to meet your specific intent.
"Following the Home page map I: 1) Create the invoice,"
Invoice = unpaid sale, as of the date of this invoice = the charges. If you are paid for that same date as the charges, go directly to Sales Receipt, instead.
"2) Receive the Payment,"
If there are open AR charges, you have to use Receive, to apply the payment against the open charges.
"3) Make Deposits."
If you are not having the sales receipts and the payments post directly to the bank register, then you have them holding in UF. This allows you, for instance, to process that a customer paid you on time on the 15th and even some paid you on the 14th, but you didn't take it all to the bank until the 17th. It also gives you one entry in the bank register to match the entry on the bank statement, making it easy to reconcile. There is nothing worse than trying to compare 250 individual deposit entries in the bookkeeping to one entry on a statement, from various dates of processing, but in one deposit date envelope or one large ACH transaction template.
Bookkeeping is easier when it matches reality.
"Throughout this process I see no place to categorize the income as Commission Income."
That is because the Charge Items you use on the Sales Forms control the flow of the data to the accounts. The Deposit is NOT income. It is two or three steps AFTER income has posted. it is just banking, now. It goes like this:
Invoice (posts as income by using items) ==> creates AR balance ==> Receive Payment (reduces AR) ==> Funds for bank ==> Make Deposit
"the deposit in my check register indicates that the income is from the account "Undeposited Funds." "
It is part of the data flow. UF is the Prior Step. That is ALL this indicates, and is correct.
Deposits are NEVER income, by default. Funds are deposited to the bank for all sorts of reasons.
"I try to edit the "From Account" and get the following pop-up "You cannot edit payment information in a deposit transaction. 1) Delete the payment from the deposit. 2) Go to the original payment transaction to edit it. 3) Redeposit the payment." "
You will orphan the data if you keep trying to force it to match your expectation. This is a Program with an interface, meaning tools. The data is a Relational database. UF = "I am on my way to the bank, because of some previous step."
Never mess with UF. It is self-reconciling process.
"I've always assumed that it was important to delineate the type of income I'm receiving for reports, is that true?"
At this time, your existing method gives you NO data for sales reporting at all. I have attached some reports for you as examples of everything you are lacking at the moment.
"Or do I just indicate in the memo field that this is a commission received?"
Try this: Go to the No Company Open screen. Open one of the Sample Files. Look at their Items. Look at their Banking. Look at their Transactions.
Open Help. read on Work With Items. Read on Customer Sales.