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what is suspense account

The aim of a suspense account in balance sheet terms is always to be a balance of zero, as this means that everything has been correctly recorded, and there are no anomalies unaccounted for. A company’s general ledger needs to show all of your organisation’s financial accounts, including your suspense account. You might be unsure about which department of your business to charge, so you place the amount in a suspense account. Adjusting Entries are used to correct mistakes, whereas suspense accounts are useful for temporarily holding transactions until there is enough information to post them. For example, if a bookkeeper is unsure about which account to debit or credit in a transaction, he/she can temporarily place the entry in a suspense account until they receive more information. The errors which do not involve a suspense account will, when discovered, be corrected by means of a journal entry between the ledger accounts affected.

  • They ensure that you account for all transactions accurately in your books.
  • It’s important to know about suspense accounts because sometimes you will need to recheck some transactions when in the account statement the debit and credit sides don’t match.
  • Customers sometimes make partial payments on monthly loan or credit installments.
  • BlackLine is a high-growth, SaaS business that is transforming and modernizing the way finance and accounting departments operate.
  • BlackLine’s Modern Accounting Playbook delivers a proven-practices approach to help you identify and prioritize your organization’s critical accounting gaps and map out an achievable path to success.
  • In this case, the accountant will pass the initial entry in the suspense account till he identifies the correct open invoice.

A mortgage servicer can use a suspense account to hold funds when a borrower falls short on their required monthly loan repayment, possibly by accident. A suspense account is an account what is suspense account in the general ledger in which amounts are temporarily recorded. A suspense account is used when the proper account cannot be determined at the time the transaction is recorded.

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What is Suspense Account?

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what is suspense account

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