Security Deposit In Balance Sheet

Ayush (Executive ) (6432 Points)

25 July 2023  

A security deposit is a sum of money paid by a tenant to a landlord before moving into a rental property. It serves as a guarantee of the tenant's commitment to the lease agreement. The deposit provides the landlord with financial protection in case the tenant causes any damage to the property or fails to fulfill their rental obligations. At the end of the lease term, the landlord will typically return the security deposit to the tenant, minus any deductions for damages or unpaid rent, if applicable.

The security deposit should be reported as a long-term asset on the balance sheet under the category "Other assets."

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