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How a deposit moves through the ledger.

Guide

When a deposit becomes revenue

Getting paid and earning the money are two different dates. Between them the cash is a debt you owe in work, not income. This traces a $10,000.00 quote with a 30% deposit through every posting, so you can see exactly where that gap sits on the balance sheet — and what closes it.

Walkthrough

Follow one deposit through five stages

Quote accepted, 30% deposit requested

The customer signs on the hosted proposal page. A deposit percentage is set on the quote.

A quote is a promise, not a transaction. Nothing is posted — there is no receivable and no revenue until something is actually billed.

Quote

Q-1042

Date

2026-08-03

Design & build — full scope10,000.00
Subtotal10,000.00
TPS 5%500.00
TVQ 9.975%997.50
Total due11,497.50

Deposit of 30% due on acceptance.

Account balances after this step

1010 Bank

normally debit

0.00

1200 Accounts receivable

normally debit

0.00

2300 Customer deposits

normally credit

0.00

Nothing owed to the customer.

4000 Revenue

normally credit

0.00

2120 TPS collected

normally credit

0.00

2130 TVQ collected

normally credit

0.00

The journal entry Kulanz posts

No journal entry

A quote never touches the ledger, however large it is.

Walkthrough1/5

Paper trail

What each side is left holding

Every stage leaves a document with the customer and an entry in the ledger. Read either column top to bottom and you get the same story — they just answer to different people.

For your customer

What they receive, in order.

  1. QuoteQ-104211,497.50›

    Quote

    Q-1042

    Date

    2026-08-03

    Design & build — full scope10,000.00
    Subtotal10,000.00
    TPS 5%500.00
    TVQ 9.975%997.50
    Total due11,497.50

    Deposit of 30% due on acceptance.

  2. InvoiceINV-20413,449.25›

    Invoice

    INV-2041

    Date

    2026-08-05

    Deposit — 30% of quote Q-10423,000.00
    Subtotal3,000.00
    TPS 5%150.00
    TVQ 9.975%299.25
    Total due3,449.25
  3. ReceiptINV-20413,449.25›

    Receipt

    INV-2041

    Date

    2026-08-07

    Payment received — thank you3,449.25
    Amount received3,449.25
    Paid
  4. InvoiceINV-20888,048.25›

    Invoice

    INV-2088

    Date

    2026-09-30

    Design & build — full scope10,000.00
    Less deposit already invoiced (INV-2041)(3,000.00)
    Subtotal7,000.00
    TPS 5%350.00
    TVQ 9.975%698.25
    Total due8,048.25

    Deposit deducted automatically on conversion.

  5. ReceiptINV-20888,048.25›

    Receipt

    INV-2088

    Date

    2026-10-06

    Payment received — thank you8,048.25
    Amount received8,048.25
    Paid

Invoiced 11,497.50 across two invoices — the quote total, charged once. The receipts acknowledge the same money, they do not add to it.

For your accountant

What Kulanz posts, in the same order.

  1. Deposit invoice INV-2041

    1200 Accounts receivable3,449.25 Dr
    2300 Customer deposits3,000.00 Cr
    2120 TPS collected150.00 Cr
    2130 TVQ collected299.25 Cr

  2. Deposit paid INV-2041

    1010 Bank3,449.25 Dr
    1200 Accounts receivable3,449.25 Cr

  3. Final invoice INV-2088

    1200 Accounts receivable8,048.25 Dr
    4000 Revenue10,000.00 Cr
    2300 Customer deposits3,000.00 Dr
    2120 TPS collected350.00 Cr
    2130 TVQ collected698.25 Cr

  4. Settled INV-2088

    1010 Bank8,048.25 Dr
    1200 Accounts receivable8,048.25 Cr

Ends at customer deposits 0.00, revenue 10,000.00, tax collected 1,497.50.

FAQ

Common questions

The awkward cases, answered. Open any question for the reasoning.

Why not just book the deposit to revenue?›
Because you have not earned it. Revenue recognised before delivery overstates the period and hides what you still owe the customer in work. NetSuite, Sage and QuickBooks all treat a deposit as a liability — only the packaging differs between them.
Why is tax charged before the work is done?›
Because an amount applied against the price is an acompte, and tax follows the payment rather than the delivery. The customer also needs a document to claim their own input tax credit, which is the second reason the deposit is invoiced rather than held silently.
What about a genuinely refundable security deposit?›
Different rule, and Kulanz does not model it. A true security deposit is not consideration until it is applied or forfeited, so tax waits. If you ever need that, it wants its own document type rather than a flag on this one — the two are taxed differently and should not share a code path.
What happens if the netting line is missing?›
The customer is billed the deposit twice — 3,449.25 too much on this example — and the customer-deposits liability never clears, so it grows with every job. Conversion adds the line automatically; it is not something to remember.
Which account should we point this at?›
A current liability you already use for unearned amounts. Charts of accounts disagree on the number, so Kulanz never guesses — set Customer deposits account in Accounting → Settings. Taking a deposit without one is refused at the point you configure the quote, not in front of the customer mid-signature.
What if the deposit is bigger than the final invoice?›
Conversion refuses rather than producing a negative invoice. That usually means the quote was edited down after the deposit was taken, which is a decision for a human — a credit note or a refund, not an automatic net.
What if the customer cancels after paying the deposit?›
Nothing here handles that yet. The liability sits on the balance sheet until you either refund it or, if the deposit is forfeited, move it to revenue — at which point it becomes taxable consideration. Both are manual today.
Does the quote itself post anything?›
No. Step 1 of the walkthrough is deliberately empty. A quote is a promise, however large, and it never touches the ledger — the first posting is the deposit invoice.

Related: General ledger · Sales

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Kulanz, a division of Audla Inc.