What is a Suspense Account?

The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users https://www.bookstime.com/ thereof should be guided accordingly. A suspense account with a balance means that there are funds within the account. These accounts are generally cleared out regularly, creating a zero balance in the account.

At Finance Strategists, we partner with financial experts to ensure the accuracy of our financial content. Let’s suppose you receive a payment from an unknown entity; or the sender is known but you are not sure which invoice they are paying for. Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. Suspense accounts are used by accountants in many different types of situations.

Suspense Records

The suspense account can hold the difference that led to the trial balance not balancing until the discrepancy is rectified. You might be unsure about which department of your business to charge, so you place the amount in a suspense account. If you’re unsure about where to enter a transaction, open a suspense account and talk to your accountant.

Partial payments can come in many different forms, such as a deposit on a real estate transaction or an upfront payment for a service order. Once the accountant has enough information, they can reassign the transaction suspense account out of the suspense account and into the appropriate account within the general ledger. However, all transactions require complete and accurate information before they can be entered into the financial records.

Suspense account meaning

A suspense account is used to provide a separate account for transactions that are unclassified. This may be issues like having an unknown customer or a partial payment. Investing and brokerage suspense accounts temporarily hold investors’ funds until the money is allocated towards the purchase of new investments. When you receive the full payment from the customer, debit $50 to the suspense account. This closes the suspense account and moves the payment to the correct account. List the suspense account under “Other Assets” on your trial balance sheet.

• Suspense records can be created from the Suspense screen in OIPA, or
  they can be generated by the GenerateSuspense business rule when it is
  attached to a transaction that is processed in OIPA.
• When customer withdrawal is completed, the money moves from the suspense account to the account of the agent who facilitated the cash withdrawal.
• Let’s suppose a company receives a cash sum of $500 but it cannot figure out who the money is from or what it is for.
• If one of these conditions applies, the transaction should be directed to a suspense account.

To mitigate financial statement risk and increase operational effectiveness, consumer goods organizations are turning to modern accounting and leading best practices. Simply sticking with ‘the way it’s always been done’ is a thing of the past. BlackLine’s foundation for modern accounting creates a streamlined and automated close. We’re dedicated to delivering the most value in the shortest amount of time, equipping you to not only control close chaos, but also foster F&A excellence. Streamline and automate intercompany transaction netting and settlement to ensure cash precision.Enable greater collaboration between Accounting and Treasury with real-time visibility into open transactions. Integrate with treasury systems to facilitate and streamline netting, settlement, and clearing to optimize working capital.