Is a security deposit an asset or a liability?

As the example showed, a security deposit is an asset for one party and the same security deposit is a liability for the other party. worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

What is a security deposit account in a lease?

In lessee’s books, the Security Deposit account is an asset account that can either be a current or long-term asset. Simply put, it’s similar to a “receivable” account, as the deposit is refundable. If the lease term is less than a year, classify the security deposit account as a current asset. Otherwise, classify it as a long-term asset.

What is a $5,000 security deposit account?

The $5,000 debit to the Security Deposit account is the amount Maxwell paid to the landlord or lessor. In lessee’s books, the Security Deposit account is an asset account that can either be a current or long-term asset. Simply put, it’s similar to a “receivable” account, as the deposit is refundable.