Suspense Account Meaning, Examples, Purpose

She’s covered a variety of topics including news, business, entrepreneurship, music, and graphic design. There is an uncertainty regarding transaction classification at the time of its entry into an accounting system. An amortization schedule is a complete schedule of periodic blended loan payments showing the amount of principal and the amount of interest.

Sometimes, you don’t have all the necessary information for accounting. Missing or incorrect details can derail your bookkeeping efforts, but you need to record every transaction. Use a suspense account when you’re not sure where to record general ledger entries.

Managing suspense account entries

The suspense account can also be used when there are issues regarding which department should be billed for an expense. These funds are placed into the suspense account until these disputes are resolved. The funds are debited to the suspense account for an expense that cannot be decided. When the business receives a payment that cannot be correctly categorized, the transaction credits the suspense account. When a fixed asset is purchased, but installment payments are made until it is received, it can be placed into the suspense account.

• No, you do not need to close your suspense account as long as you are keeping track of uncorrected transactions.
• It allocates funds until they are placed into the correct account.
• As the client works to make this decision, the money can stay in this account for a few days as needed.
• If we knew who has made the payment then that person’s account would be credited.
• As a small business owner in Canada, you encounter many documents and terms that go along with them.

The nature of accounting is to properly identify all transactions and code them to the right accounts, not leave them floating in an suspense account. The suspense account gives the accountant the time she needs to identify the transaction yet still have it in the record. As soon as she knows where the transaction goes or she has set up the new account, she needs to move it from suspense. It’s critical for a business to keep careful track of all of its assets and liabilities. But sometimes when money comes in, it’s not always clear where it’s supposed to be recorded in the general ledger. That’s where a suspense account helps — to give financial professionals a place to record uncertain transactions until they’ve done a little detective work to locate the permanent accounts where the payments belong.

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If the debits exceed the credits, enter the difference as a credit. The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. Pricing will vary based on various factors, including, but not suspense account examples limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.