I have a rented an office for my limited company, I paid 1 month advance and 3 months deposit which will be given to me once the contract is finished. I have created a deposit for rent account in the cash account and I transferred money from the business account into the deposit account. Please let me know if this is correct. How else you could assign the deposit transaction?
Please help me.
Thanks a lot.
Create an expense account called rent/Rent Expense
Create an asset account called rent prepaid
Dt: Rent expense 3 months amount
Dt: Rent prepaid 1 month amount
Ct: Cash/bank account.
I am assuming you understand Manager and have mastered Accounting 101.
The certainty of getting the contract eventually signed is high I presume, therefore Rent Expense is right for it or expensing it is ok.
Others will bring in more ideas
Your approach is not correct. Your Deposit for rent account cannot be a cash account because money cannot be moved into or out of it for other purposes. Cash accounts include checking accounts, petty cash, credits cards, savings accounts, PayPal accounts and such.
Since your deposit cannot be a cash account, it cannot be involved in transfers. You will need to delete that transaction.
You have a couple choices how to handle this. The best would probably be to create an asset account Deposit for rent. Spend Money from a cash account and allocate to this asset account. If both advance rent and the 3-month deposit were paid at the same time, use two lines on the payment voucher and assign the current rent to a Rent expense account. Your deposit is an asset because it belongs to you, even though held by the landlord, and will help you generate income in the future.
Another option is to establish your landlord as a Supplier and allocate the deposit to Accounts payable and the landlord’s subaccount. Do not indicate any purchase invoice. Because there are no open purchase invoices for the landlord, your deposit will be posted to Supplier credits automatically and remain associated with the landlord until future transactions involve the landlord. Read about that here: [16.7.73] Categorization against customer and supplier accounts more intuitive - #16 by maarten
Your many recent questions on the forum suggest you are new to accounting. I recommend some background reading to gain familiarity with appropriate procedures of double-entry accounting. You might start here: http://www.accountingcoach.com.
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Many thanks for your continued support. Yes, I am new to accounting 
Many thanks indeed. This is very much appreciated.