You never use the Deposit screen as your data input worksheet for Customers at all. There is no listing of Liability or Income here.
This is done using an Other Charge Item type, linked to Income; put it on a Sales Receipt when you Got the prepayment: "We are an S-Corp running on a cash basis. We get half down from our customers to get a job started and that money goes into a Customer Deposit that is a "other current liability"."
Later, put that same Prepayment Item on a Credit Memo when you are ready to show it is applied to an Invoice for the Actual Sales.
The Intuit Support Article is here:
QB Desktop Prepayments
