How to Record Tenant Security Deposits
Recording the receipt of security deposits which are held in trust and not considered revenue.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Restricted Cash - Security Deposits | Asset | 1,500.00 | - |
| Tenant Security Deposit Liability | Liability | - | 1,500.00 |
💡 Accountant's Note
Security deposits are recorded as liabilities because they are refundable to the tenant upon lease termination, subject to property condition.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a separate trust bank account in the chart of accounts to track restricted funds.
⚠️ Audit Flags
Commingling of security deposit funds with general operating cash accounts.
📄 Required Documentation
Security deposit receipt and move-in inspection report signed by the tenant.
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