He seems to understand it is in a liability account, which most people would never guess to do and he also knows he needs to move it to (revenue) income later, which is way ahead of most.

This is why I shared several account names that all mean the same thing:  Customer deposit, Deferred/unearned revenue/income; all= money paid in advance by customer. I see that QB Teachment calls it Prepayment and what he attached calls it Upfront Deposit, all same thing. 

That does not sound like a refundable deposit to me and yes only he knows the answer for sure but from what he described, my guess is that he is doing accrual-basis accounting (hence the liability) and that he may be doing cash-basis for taxes, which sucks for payments received in advance since then he must pay taxes on it before he even recognizes as income on his books.  

If that is the case, then his books remain the same as it is only revenue on cash-basis tax return.