The Proposal Status notifications in the main Dashboard and Projects list is tabulated from what you set each Proposal’s ‘Internal Status’ as, on the proposal page’s edit form. These numbers will change as you update the status field in your proposals. 

In Process means status is either: ‘still working on' Or 'sent to client- pending'

Approved- Need Deposit means status is: ‘approved by client’

Deposit Paid- Tracking means status is either: ‘items ordered- tracking' OR 'items delivered' OR 'deposit received'

Closed Complete means status is either: ’deposit paid- closed' OR 'proposal closed’

Client Declined means status is: 'declined by client'