Security Deposits Received
Code: 2152Account Information
| Financial Statement | Statement of Financial Position |
| Normal Balance | Credit |
Definition
Cash security deposits received from customers or tenants as guarantee
Common Journal Entries
Dr. Bank Account
Cr. Security Deposits Received
Dr. Security Deposits Received
Cr. Bank Account
Dr. Security Deposits Received
Cr. Other Income
Dr. Cash in Hand
Cr. Security Deposits Received
Dr. Bank Account
Cr. Security Deposits Received
Dr. Security Deposits Received
Cr. Bank Account
Dr. Security Deposits Received
Cr. Other Income
Dr. Cash in Hand
Cr. Security Deposits Received
📐 IFRS vs US GAAP Accounting Treatment
❓ Frequently Asked Questions
A: Security deposits received are cash amounts received by a company from its customers or tenants as collateral for future obligations (e.g., lease guarantee, service contract guarantee). They are considered a liability on the balance sheet until refunded.
A: No, security deposits received are not considered revenue. They are held in trust by the company and must be returned to the customer upon contract termination (if no violations occur). They are only recognized as revenue if deducted as a penalty or compensation for damages.
A: When refunding a security deposit received, the entry is: Dr. Security Deposits Received, Cr. Bank Account or Cash in Hand (for the refunded amount). If any portion is deducted (e.g., compensation for damages), the deducted amount is transferred to revenue.
A: If the security deposit is expected to be refunded within one year, it is classified as a current liability. If refund is expected after more than one year (e.g., long-term lease guarantee), it is classified as a long-term liability.
A: If the contractual relationship ends and the customer does not request a refund of the security deposit within a reasonable period (determined by state laws or company policy), the amount is transferred to other income with the entry: Dr. Security Deposits Received, Cr. Other Income.