Sir,
I want to prepare a P&L account sheet estimated mannualy, my query is can i post Security Deposited amount in expenses site which i deposited to my client ?
Create an asset which has the characteristics of a liability in the asset form which needs to be realised.
Security deposit a/c -assets
To creditors a/c -liabilities
when payment is made:
Security deposit expense a/c
To Bank a/c
when you loose the deposit:
SPLOCI-PL
To Security deposit a/c
But the above procedure is wrong because you are actually expensing and adding loss over it to profit and loss. So, to be prudent in recording journal entries, the following method is best:
Security deposit a/c -asset
To Bank a/c
when you loose your deposit:
Loss on deposit a/c p&l
To Security deposit a/c -asset
For this purpose, you don’t recognise it as an expense in accruals because you will always get that amount back
CAclubindia
