The undeposited Funds account in QuickBooks is an Asset Account (other current asset) and is a clearing account to record funds received from your customers but not yet deposited in the bank.
When I teach QuickBooks I tell my students to imagine their locked desk drawer or company safe where they place checks received during the week until they go to the bank on Friday and make the deposit. As the week progresses, checks come in the mail and you record their payment in the customer center (accounts receivable) using the "receive payments" icon on the home page. On Friday when you are ready to go to them bank to make your weekly deposit (or whatever day you do this, maybe even same day), use the "make deposit" icon on the home page. This will show all the checks you have recorded using the "receive payments" task in Quickbooks that have not yet been deposited in the bank. You check off the ones you are taking to the bank or use the "select all" button and record this deposit. Be sure you have the correct checking account identified that you are depositing the funds into.
If you notice when looking at your trail balance, balance sheet or chart of accounts list that there is a balance in the "undeposited funds" account you should be able to verify that you have that much ready to go to the bank which you have not deposited.
This is an excellent tool which allows you to get the customers payment recorded to their account immediately but not show it in your bank balance until it really is in the bank.
Remember: record those customer payments on the date you receive them, not the date the check was written.
If your undeposited funds account is not reflecting the correct amount (pending deposits that need to go to the bank) give me a call, I can research and help correct the situation.