21 Oct 2017
Security deposits are often treated as current assets or liabilities by organizations. Accountants do not like dealing with security deposits that have a return window of more than a year. Security deposits are often received or paid in advance before availing a service.
These deposits are maintained in order to ensure that overdue payments and damages can be easily adjusted. With QuickBooks, users can not only record security deposits but also apply them to appropriate assets and liabilities accounts. Users can also use reporting tools in order to analyze data related to security deposits.
Note: Users who are giving security deposits need to create a liability account instead of an asset account. Input the name of the new account as “Other liabilities.”
Once security deposits have been created, stored and mapped correctly, users can proceed to create reports using them. The data regarding these deposits will appear in most financial statements available in QB. Make sure to take a note of these numbers while creating those financial statements. Also, wrong information regarding these deposits can cause a mismatch in financial statements such as balance sheets, ledgers and so on. It is difficult to troubleshoot such inaccuracies.
You can also refund these deposits and delete the accounts associated with them. Though this may not be the ideal way of doing it, it is definitely the fastest one available to QB users.
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