ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A security deposit is money that the tenant pays to the landlord. It provides monetary security to the landlord, in case of damage to the apartment or failure by the tenant to comply with the agreement (such as moving out before the lease ends).

Detailed explanation-2: -A security deposit serves as a means to fix or replace something in a rental unit that was damaged, lost, or stolen by the renter. Security deposits typically must be paid prior to moving in and state laws dictate how security deposits are applied once needed.

Detailed explanation-3: -The security deposit paid to another entity is a current asset, if the security deposit will be returned within one year of the balance sheet date. The entity holding the security deposit will report it as a current liability, if it is to be repaid within one year of the balance sheet date.

Detailed explanation-4: -The person paying the security deposit would credit the asset account Cash and would debit the asset account Security Deposits. The person receiving the security deposit would debit the asset account Cash and would credit the liability account Security Deposits Returnable.

Detailed explanation-5: -Concept: Security deposit: It is an amount of money which shall be deposited by the contractor whose tender has been accepted in order to render himself liable to the department to pay compensation.