Deposit payment to supplier

My supplier offers me to pay a 50% deposit prior to goods delivery. Shall I simply select the ‘inventory on hand’ account without selecting the actual inventory items from the following combobox? Once I pay the remaining 50% I would select the ‘inventory on hand’ account and the inventory items.

Is that the way to go?

No, you should create supplier under Suppliers tab and allocate the payment to supplier (50% deposit) to Supplier credits account. This way from accounting point of view, your supplier owes you this deposit until they issue you purchase invoice which you would enter under Purchase Invoices tab.

Deposit will be then automatically allocated against purchase invoice you will enter later.

Thanks Lubos. Makes sense!