Thank you for sharing complete details of your concern, @qbo2.

Allow me to share some information on how recording and applying invoice payments work in QuickBooks Online.

Unapplied Cash Payment Income and Unapplied Cash Bill Payment Expense are two default accounts in the system that cannot be deleted or changed. These are created  for cash-basis reporting.  

You'll see the Unapplied cash payment income on your reports if:

• Payments are recorded in QuickBooks without applying or associating it with any sales forms (i.e. invoice, sales receipts).
• An advance payment is made and is recorded in the system before creating any sales forms (i.e. invoice, sales receipts).

To fix this, here's how:

1. Run the Open Invoices report.
   1. Go to Reports.
   2. Choose Open Invoices.
   3. Select the Date range of the report period.
   4. Click Run Report.
   5. Under the Transaction type column, filter to see Payment transactions.
      • If the Payment transactions matches any Open Invoice, proceed to Step 2.
      • If it does not matches any Open Invoices, go to Step 3.
2. If the Payment transaction matches an open invoice:
   1. Choose the Payment date to open.
   2. Check the Open Invoice under Outstanding Transactions.
   3. Click Save and Close.
3. If the Payment transaction doesn’t match an open invoice:
   1. Click the Plus icon (+).
   2. Select Invoice.
   3. Fill out the form with the same customer, amount and date as the payment.
   4. Click Save and Close.
   5. Go back to the Open Invoices report.
   6. Locate the unapplied payment, then select the date to open.
   7. Under Outstanding Transactions, check the Open Invoice.
   8. Choose Save and close.
   9. Access  your Open invoices report to see if there are any more transactions listed as a Payment. 

While the Unapplied Cash Bill Payment Expense will be included on your reports if:

• Bill payments are recorded before creating any bills.
• Recording bill payments without applying it.

To remove to Unapplied Cash Bill Payment Expense from the PL report, here's how:

1. Open PL report.
2. Go to the Unapplied Cash Bill Payment Expense section.
3. Click the total amount to view the transactions that cause it.
4. Go to the Plus icon (+) .
5. Choose Pay bills.
6. If you see bills matching the bill payments in the list, select the checkboxes next to them, then Save.
7. If you don’t see a matching bill for one of your bill payments, create it:
8. Click Plus icon (+) >> select Bill.
9. Fill out the form with the same vendor/vendor, amount, and date as the bill payment.
10. Hit Save.

That's should do it! This should get you on your way recording and applying deposits to your invoices. 

If there are any app features you’d like to get more familiar with, feel free to visit our Community page. I 'm always here to lend a hand.