Credit notes for security deposits?

[Wm]

In article <6867698.YcQyFCeEPg at calufrax.nottingham.standbyevents.co.uk>
"Maf. King" <maf at chilwell.net> wrote:
>
> On Monday, 18 April 2016 20:06:12 BST trythis wrote:
> > I am using the business component to keep track of people that rent out a
> > gallery space.
> > I am wondering if I can create an invoice for the use of the space including
> > the deposit.  We often return the deposit and I was thinking the invoice
> > could cover both the rent and deposit together.
> >
> > When we return the deposit we could issue a credit note to cover the refund.
> >
> >
>
> Hi,
>
> I don't know about your local tax & legal rules, and I'm not an accountant
> anyway,  but it seems to me that a deposit held against possible future
> default or damage would be a liability to your books.
>
> I think that the deposit isn't your money, it is the client's, you are just
> "looking after it" for them.  You have first dibs to spend it (to cover unpaid
> rent or damages (when it will become your income)), or give it back to them at
> the end of the tenancy period.

Also invoicing deposits does weird things to income and therefore 
possiblly tax, etc apart from being wrong.

Deposits should, strictly speaking, go into a seperate bank account 
(if banked rather thn kept in a box in the cupboard) to the 
galleries normal banking account with the other leg being, as Maf 
suggests, a Libility.

> Gnucash invoices in the past have not been able to book line items to a
> Liability account - I don't know if that has changed with the modifications to
> recent versions (because I haven't tried to do it!) - which I guess is why
> what you are saying seems like a kludge to me - credit notes would return
> "income" not "liability" IMHO.

I've just tried and you can put a Liability account on an invoice 
line and post it.  I haven't tried to see if it works sensibly for 
the rest of the process.

-- 
Wm