How to Reclassify Security Deposits
Move security deposits paid for long-term leases from current assets to non-current assets.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Security Deposits (Non-Current) | Debit | 5,000.00 | - |
| Prepaid Expenses (Current) | Credit | - | 5,000.00 |
💡 Accountant's Note
Security deposits for multi-year leases are generally not liquid within one year and must be classified as long-term assets.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a specific GL account for non-current deposits to separate them from monthly prepaids.
⚠️ Audit Flags
Large balances in current prepaids that do not clear within a 12-month cycle.
📄 Required Documentation
Executed lease agreements showing deposit amounts and lease expiration dates.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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