How exactly are UMIs used to dedupulicate?

[Sebastian]

This is to resolve a question already asked on Stack Overflow:

According to swbarnes2, UMI compression should work as follows is done as follows:

If the two reads share cell barcodes and UMI sequences and align to the same gene, (even if they are different sequences) then they originate from the same RNA molecule, and should only count as

I wanted to double check that this correct?

[jamesnemesh]

I've answered there as it may have more visibility.