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Is a security deposit for a rental agreement recorded in a liability account?

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Question ajoutée par Khaled Mohee Eldeen Abbas Mahmoud , Chartered Accountant # 10465 , Self-employed
Date de publication: 2014/10/13
georgei assi
par georgei assi , مدير حسابات , المجموعة السورية

I agree with Mr. Patel answer

Diana Mamuyac
par Diana Mamuyac , Receivable Accountant , Three60 Communities

It depends. If you are  the one paying , its not a liability but an asset. but if you  are the one receiving , its a liability

Divyesh Patel
par Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

The person paying the security deposit would credit the asset account Cash and would debit the asset account Security Deposits. The person receiving the security deposit would debit the asset account Cash and would credit the liability account Security Deposits Returnable.

 

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
par VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

The person paying the security deposit would credit the asset account Cash and would debit the asset account Security Deposits. The person receiving the security deposit would debit the asset account Cash and would credit the liability account Security Deposits Returnable.Let's use an example. Monica pays the landlord $500 as a security deposit as required by the lease for the apartment she is renting. If she causes no damage, she has a right to the $500 at the end of the lease. She gave up an asset (Cash of $500) but has another asset: the right to $500 at the end of the lease. The landlord receives the $500, but has an obligation to return the security deposit at the end of the lease. The landlord received an asset (Cash of $500) but has a liability to return the $500 at the end of the lease (unless there are damages).As the example showed, a security deposit is an asset for one party and the same security deposit is a liability for the other party. 

Khaled Abdelrehim ACCA DipIFR CMA
par Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

Agree with the mentioned answers.

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