Customer Deposit
Definition
A customer deposit is money received from a customer before the work or product has been delivered. It is a liability, not revenue, because the business still owes the customer something.
Example
A customer pays $500 in advance for work that will be completed next month. The $500 is recorded as a customer deposit (unearned revenue), not as revenue.
Why It Matters
Recording a deposit as revenue overstates income. The business has not yet earned the money, so it is a liability until the work is completed.