If you delete the master data, the related time entries will be deleted too. Then they are no longer available in the reports.
You can get to the administration area by clicking on the gear-wheel on the right top corner (Screenshot #1). You can choose between "Costumers & projects", "Services" and "Co-workers". In this example we choosed "Costumers & projects".
By clicking on the visibility-icon (Screenshot #2) you can disable the corresponding customers.