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A suspense account is an accounting or nominal account transaction amounts temporarily recorded. It is used to record the transactions that can not be classified properly at the time of entry, based on the information available and needs further research with an accountant or bookkeeper. Once the transaction has been classified and status of the connection has been identified, the transaction amount is transferred from the suspense account and back into the right place.
main advantage of this is that it allows bookkeepers somewhere to allocate points as they are unsure of. They can then research and identify the items and assign them to the right place. Any company that uses accounting software to move their accounts and files should use a suspense account if they are in any doubt about the individual transactions on their time of arrival.
Certain receipts or invoices, for example, could have been assigned to an invalid number, or account number could be missing from the bill of sale. When a number is correct, or bank account is obtained, then these objects can be transferred from the suspense account and posted to the right place. In the case of payments, for example, the same logic applies if there is a dispute about the division payment should be paid for, or payment can not distinguish a bank statement, it must be temporarily held in a suspense account.
It not only helps in tracking all “uncertain business’ accounting needs to beat, but also to maintain the accuracy of management or financial statements are prepared. It helps to ensure that no items are overlooked in the posting process and trial balance is right for a particular trading period
Sometimes the suspense account is used if there are slight differences that need to be written off. for example, it is not uncommon for a bank or cash account to have some reconciliation differences. This could be due to reduced errors or bookkeeper may have made a little mistake when entering data. For these types of different can be posted to the suspense account and consequently written off in another area under the advice of the auditor. Indeed, spending a lot of time and effort looking for the reasons for this small difference may not be realistic.
The result is a suspense account is very useful if accounting is uncertain where to send individual transactions. This transaction can be held in “uncertainty” the accountant finds the appropriate accounting treatment for them, or it can be used for certain receipts and payments and other small differences are not worth further investigation.
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