Hi Rustler, thanks for your swift reply. 

I agree that deposits do not pay down liabilities.  In our case, for example, a customer pays us $25k up-front for equipment that is delivered 2-months later.  There is clear language in our estimates that states if equipment is not delivered, we must return the deposit.  Therefore:

1)  Creating the invoice for a deposit inflates our income for the month because we are not recognizing the COGS, even as we map the deposit to a liability. 

2) Our preference is to create an invoice when the equipment has been delivered. 

3) When we do create the invoice, I want to apply the advanced deposit (recorded as a Sales Receipt mapped to the Customer Deposit liability account). However, QBO does not have "Customer Deposit" as a payment method. 

I also prefer not to enter the customer deposit as a negative on the Invoice because then the INvoice shows as $0.  We want to see the true amount.  

Following these steps (to invoice ONLY when equipment is delivered (dropshipped) by our vendor and paid for by us allows to properly match the sales and the COGS for accurate reporting analysis.  

Am I over-reaching here?  Is this even possible in QBO? Thanks!