Deposit is money that can be paid along with payments or new rentals down payments. This money can be used by the customer later to pay payments or to pay toward the payoff of contracts. You also have the ability to refund deposits (Point of Sale Menu > option 4 > Option 4).
In RTO Pro the deposit is not counted as income and not taxed until it is actually used to pay a payment etc. This is the proper way of tracking Deposits if you are on an Accrual Basis Accounting Method.
Before accepting Deposits from customers we suggest you talk to your accountant or legal counsel. Below is some advice we received from an Attorney and a CPA familiar with Rental Purchase. Please note this information is here for guidance only and not meant to be legal advice, make sure you talk to your accountant / legal counsel before deciding to accept deposits or not.
Attorney’s response to the use of Deposits:
I am aware that some dealers do use suspense accounts for various things, but which generally relate to the company holding a customer's money for some reason, presumably with the understanding that eventually the customer will spend that money with the company or will be able to get it back. If the customer cannot get the money back, then I would worry as a lawyer.
CPA’s response to the use of Deposits:
If a customer pays in advance for future services to be rendered or to buy a product in the future, there are a couple of ways to record this type of transaction on the books. Probably the most preferred way is to treat the advance as "Deferred Income" or a "Customer Deposit" and record the amount as a liability. Cash is recorded as a debit, Deferred Income as a credit. When the amount is applied toward the rental or purchase, then Deferred Income is decreased (debit) and a sales revenue account is increased (credit). This is how it would be done under an accrual basis accounting method. Another option, if an accounts receivable system was in place, then the advance is simply treated as a credit to accounts receivable. Under this method, taxable revenue is not realized until the sale takes place. If the business is using a Cash basis accounting system, then the advance is treated as income when received.