Uncategorized Transactions
Definition
Transactions in your accounting software that have not been assigned to the correct account, often sitting in "Uncategorized Income," "Uncategorized Expense" or "Ask My Accountant."
Want a deeper explanation?
A small balance during the month is normal. A large or growing balance means the books cannot be trusted, because nobody knows what that money was.
Clearing it is one of the first steps in any cleanup. Watch for: uncategorized balances at month-end or year-end, which should always be zero.
Example
$46,000 sits in Uncategorized Expense at year-end, so the P&L cannot say whether it was inventory, ads, owner draws or loan payments.