A deposit received is a payment for goods and services which yet to deliver. It’s liabilities. The balances are cumulative presents in the Balance Sheet. It has to offset against the invoice when goods and services have fulfilled at a later stage.
All the balances in the Balance Sheet have to transfer over when the accounting system changed. And that includes the deposit received from various customers.
Let’s assume that you have decided to move your business accounts to the cloud and adopted QuickBooks Online (QBO) accounting system.
You can use the general journal to transfer the balances from the Balance Sheet to the QuickBooks Online. Set the date of the journal as the crossover date, and then debit the opening balance equity and credit the deposit received account when transferring the deposits over to the new system.
Issue an invoice when goods and services have fulfilled on the following financial year. Then, use a journal to transfer the deposit, which paid by the customer in the previous year, to the receivable account. It reduces the amount owed by the debtor when the journal credits the accounts receivable.
Offset the journal with the outstanding invoice when payment received.
QuickBooks accounting system is easy to use and is suitable for small businesses. Sign up a demo to find out more.
