The accounting treatment of a deposit depends on how the funds are received and used:

1. Deposit as Storage of Own Funds

If the deposit is used to store company funds for later withdrawal:

• Record a transfer from the current account to the deposit account using Money Transfer
• The funds remain an asset but change form

Entry:

• Dr Deposit Account
• Cr Current Bank Account

See more on Money Transfers

2. Deposit to Supplier

If money is transferred to a supplier as a deposit, it is not an expense, but an asset (prepayment/deposit):

• Create a Bank Payment (or Cash Payment) with Transaction Type: To Supplier 

On the Payment Details tab: 

• Select the supplier
• Check the Advance box
• Choose GL Account: Deposits Paid to Suppliers

Entry:

• Dr Deposits Paid to Suppliers
• Cr Cash / Bank

See more on Cash/Bank Deposit (to Supplier)

3. Deposit Issued as a Loan

If the deposit represents a loan issued to another party (with interest):

Step 1. Create a Loan Agreement

Path: Money > Loan Documents > Loan Agreements

• Select Transaction Type: Loan Issued
• Fill in:
  • Borrower
  • Contract / Agreement number
  • Loan amount
  • Interest rate
  • GL accounts and other dimensions

On the Amortization Schedule tab:

• Set schedule type and payment frequency
• Enter loan start date, term, and repayment start date
• Click Calculate, then review and post

See more on Loan Agreements

Step 2. Record the Loan Disbursement

• Create a Bank Payment with Transaction Type: Loan Issued

On Payment Details tab, select:

• Contract
• Loan Agreement
• GL Account (Loan Receivable)

Entry:

• Dr Loan Issued
• Cr Cash / Bank

See more: Deposit in Bank (as Loan)

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