Reviewed by Oct 05, 2020| Updated on
A suspension account is an account used for any expenditure or balance that can not be established temporarily. Usually, a suspense account is in the general ledger. Any amount posted to the suspense account will only be present temporarily, as this amount will be investigated and posted to the appropriate account.
When a transaction is made, but it is not clear whether the transaction occurred or for what it is intended (for example, it can not be linked to an invoice or expense), it is called a suspense account. Alternatively, a suspense account is used to separate the amount before it can be found and put in the appropriate account.
It is important to hold unidentified amounts in a separate account to organise and identify them later more quickly. Such unexplained sums will not be left in transactions which have already been established. The suspense account offers them a temporary position before proper placement is possible.
Most accounting systems include suspense account in their account table, but this is something you should avoid using when other choices exist. If there is no account for a specific cost, then the user needs to build a new one within the chart of accounts.
Online accounting and invoicing software today provides you with the means to manage your income and expenditures quickly, from anywhere. Automatic bank reconciliation will help you suit your payments in a moment when it comes to the transactions.
Unmatched numbers are marked, ensuring that if you know where they belong, you can quickly go back and balance them. The suspense account is built-in, allowing you to effectively manage all transactions, even if they have not yet been categorised.
The following are the few scenarios in which the suspense account can be used: - While preparing a trial balance - When received a partial payment - Do not know from whom the payment is received - When purchased a fixed asset but don’t receive it until it’s paid off - When you do not know how to classify a transaction