security deposit liability gets accounted for twice

Chris29

If I enter an amount (2500) in the Security Deposit field under the edit tenant functionality, it gets added to *Security Deposit Liability* account, which would make sense.

However, when the tenant pays their security deposit, I have to account for that when I record the receipt of that payment. Logically, it makes sense to me that I would categorize this amount as *Security Deposit Liability*, which allows me to track it as such, and let's me reconcile the payment in the account that receives this payment.

The issue, as you might have noticed, is that now I've got 2500 x 2 in Security Deposit Liability.

Entering it in the tenant functionality area is a one sided transaction, therefore it gets double accounted for, which is wrong.

How do others account for this?

The obvious answer to me is to not record it in the tenant screen, but that doesn't seem "right" to me, from a tracking point of view.

Suggestions welcome.

Tom Young

I don't use the Quicken product that has a rental function and don't know, really, how that aspect of the program works.  But if I've understood you correctly and the program allows you to enter a security deposit amount somewhere that affects the Security Deposit Liability Account with no other Account of Category balancing the amount you've entered, then Quicken is in error there and violated the basic "double entry" aspect of accounting. 

(There are features and aspects of Quicken throughout the program that allow you to make what appears to be "one sided" entries.  To a large extent that's probably necessary because the program is geared to non-accountants who can't go back and reconstruct decades of financial history and simply want to "get started" with a more-or-less correct "current balance" and work forward from there.  Perhaps that's what's going on in this case.)

You've figured out the problem and the obvious answer is to not use that box but instead make the proper accounting entry when you receive the cash in order not to overstate your liability.

Chris29

Thanks Tom. I agree it seems Quicken is broken here. I was wondering if Quicken ever reads and responds to this forum, and if they have any comments on this situation.

Also, how do other handle this, apart from not using the 'broken' functionality?

Tom Young

Since I can't see what you're looking at I'm pretty much flying blind, but what you're describing can certainly happen in other areas, as well. 

So, for example, if you set up a mortgage loan using the mortgage "wizard" and do it, say, the day before the loan funds, then when you make the loan deposit in your bank the next day (assumption is that deposit amount = gross loan) you'll end up with a Mortgage Loan Liability Account that's twice the amount it should be.  The loan wizard makes a "one sided" entry into the Account called "beginning balance" and then you credit that Account again with your deposit.  The cure here is to delete the beginning balance entry and all's good.

I'm sort of assuming what you're encountering here is something similar, that there's a "rental wizard" that's soliciting information about a tenant and makes that initial entry, (what's the wording associated with that entry in the Account?)  Then you're doubling it up with an actual deposit. 

I can imagine situations where you'd be completely happy with this programming.  If you started using Quicken when you have an existing tenant that gave you a $2,000 deposit years ago, which you promptly put in your regular bank account, then you'd enter the balance in your check book into Quicken for your Checking Account and Quicken would enter the $2,000 into the Security Deposit Liability Account when you told it about your tenant, and your balance sheet is properly stated. 

Chris29

You've got the point, and it makes sense. I've seen something similar to what you've described. Not that it matters, but what's happening here is a bit different.

I've attached a screenshot showing the place where the tenant deposit gets entered (2500). If you enter the deposit into this field, it creates (or populates) *Security Deposit Liability* account with this amount, as of the date in this area.

When I receive the first month and deposit from the tenant, I categorize the rent as rental income, and the deposit into *Security Deposit Liability* account, which then doubles the amount in this account.

I could categorize it as something else, to avoid the double accounting of it, but that doesn't make sense to do that.

As we've both suggested, the easy answer is to not use the field in the screenshot, but then I have no 'record' of what the deposit amount was in the area meant to track it.

It seems to me that entering the amount into this field, and populating the date should post it to the liability account, but should also show as a deposit into the account designated in another rental screen (second screenshot).

This would make it tie out, but would maybe make it a bit more challenging to reconcile the bank account, if you receive one check for 1st and deposit, but that's much easier to overcome, and would be "correct".

Maybe Quicken reads these and can improve here.