does anyone know how netsuite decides which account to debit when recording a customer deposit and choosing an undeposited funds?

Isn't it the system-generated Undeposited Funds account that you may have already renamed?

We are seeing that NS is hitting the system generated account on the credit side but its choosing a "other current asset" account on the debit side and that's what we cannot find an answer for

Wouldn’t the other side be coming from the transaction you are paying?

That comes further down the process? Customer deposits still impact the GL before they are applied/as soon as they are recorded as a deposit

Perhaps it is a native system account I think called Customer Deposits.