For cash-basis accounting, income is counted when cash is received.

 

For accrual-basis accounting, income is recogized when it is earned, so when you are paid in advance it is Deferred income (customer deposit) until you do the work to earn income.

@AGMAIN wrote:

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".  When the total due on the bill is paid in full that money is then moved out of customer deposits and into income. The accountant is telling me the money in customer deposits is considered income for the year so I need to move it to income on Dec 31st. What is the best way to move it to income and then back into customer deposits so that when the remaining payment is made on an invoice my customer deposits account will still be accurate? 

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