When the controller is available, the accountant will get clarification and will move the amount from the Suspense account to the appropriate account. The account temporarily holds entries while you decide how you will classify them. A suspense account can also hold information about discrepancies as you gather more data. A general ledger is where a business records its assets and liabilities on an ongoing basis, broken into separate categories or accounts. Suspense accounts are used for assets or liabilities that require further clarification before they can be assigned a permanent place in the ledger. A suspense account will be managed by the finance team and serve as a catch-all for unknown amounts.

• Until the procurement or accounts department can get verification from the departmental manager and the correct budget is identified, the cost sits in the suspense account.
• A suspense account is also known as a difference in book account or an error account.
• A suspense account is an entry in your ledger where you can record transactions that can’t yet be classified.
• GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices.
• Until you actually make the withdrawal from the agent or financial institution, the remittance money may be stored in their suspense account.

A suspense account is essentially a bookkeeping technique for keeping track of funds for a brief period until particular issues are resolved. A business can use a suspense account to record payments it has received but that can’t be properly accounted for until certain missing information (such as an invoice number) is obtained. In mortgage servicing, it is a way for the servicer to record incomplete monthly payments until the borrower has made the payment in full. Brokerage firms also use suspense accounts to, for example, keep track of a customer’s money between the time they sell an investment and when they reinvest that money. When the company gets the entire payment from the customer, they will debit $50 from the suspense account and credit the receivable accounts with the same amount.

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As you can see, there is now a nil balance carried forward in the suspense account. Bank charges for the year of $115 have been omitted from the https://www.bookstime.com/industries accounting records. Sales returns for goods sold on credit in September 20X8 of $8,980 were accidentally recorded by processing a sales invoice.

The difference amount is temporarily recorded in a suspense a/c and should be cleared at some point as it possesses a control risk. It is used to mitigate risk which is addressed and when the errors are rectified. Let’s suppose you have been alerted that a remittance someone sent you from abroad is ready for withdrawal. Until you actually make the withdrawal from the agent or financial institution, the remittance money may be stored in their suspense account. There is an uncertainty regarding transaction classification at the time of its entry into an accounting system.

Example #4 – Trial Balance

If an expense is incurred, the benefit of which is received by more than one account, such an expense can temporarily be placed in a suspense account. Later, the entries can be transferred to the relevant accounts at the appropriate ratio. One important use of a suspense account is to bring the trial balance into agreement. In this suspense account article, we have explored the definition of suspense in accounting and the purpose behind its use. We have discussed different types of suspense, including transaction suspense, allocation suspense, timing suspense, and reconciliation suspense. Additionally, we have provided examples of how suspense can arise in various situations.