USA payment classification?

[Laurie HI CPA]

In general, does a payment have to be for an inventory item in order to be recorded as a deposit on the balance sheet?

 

[Laurie HI CPA]

WAIT - there's more

Nevermind ...

if the payment is for something else (an expense maybe) it would go under prepaid expense. duh

but i guess if the payment was for an asset it could go to the deposit account, or maybe it would go directly to the fixed asset account, even if it was only a partial payment.

what else, hum ... a pre-payment for services could also go to prepaid expense.

there would be seperate prepaids for interest and insurance, right?

IN FACT --

PLEASE someone, ANYONE help, what type of account would one that you call the DEPOSIT account be ??????????????????????????

AND ... where would it be on the financial stmts ?????????????????????

AND ... what exactly would you put in it ?????????????????????

 

[kirby]

Let's say you leave a deposit to buy a vehicle. It's not a fixed asset (yet). It's not a prepaid expense. It's just a deposit recorded as an asset. Current asset if you are going to complete the purchase within a year.

 

[Laurie HI CPA]

so the answer to my original question would be

NO - a payment DOES NOT have to be for an inventory item in order to be recorded as a deposit on the balance sheet.

Thank you very much Kirby

 

[tonyjr82]

So, lets say I purchase warehouse racking that requires a 50% deposit prior to delivery and installation. I would be ok to simply post the deposit against the vendor account and then move the transaction to fixed assets upon delivery?

 

[kirby]

Lets say racking full price is $5,000. You pay 50% at order and rest at delivery.

At order
DR. Deposit (current asset). $2,500
CR. Cash. $2,500

At delivery
DR racking (fixed assets). $5,000
CR cash. $2,500
CR. deposit. $2,500