Once the accountant has enough information, they can reassign the transaction out of the suspense account and into the appropriate account within the general ledger. Companies come to BlackLine because their traditional manual accounting processes are not sustainable. We help them move to modern accounting by unifying their data and processes, automating repetitive work, and driving accountability through visibility. Since our founding in 2001, BlackLine has become a leading provider of cloud software that automates and controls critical accounting processes. Whether you’re new to F&A or an experienced professional, sometimes you need a refresher on common finance and accounting terms and their definitions. BlackLine’s glossary provides descriptions for industry words and phrases, answers to frequently asked questions, and links to additional resources. BlackLine is part of your SAP financial mission control center.

• A suspense account is used to temporarily record transactions that lack the normal, detailed information that accountants require to make proper journal entries into the business’s accounting records.
• When we record uncertain transactions in permanent accounts, it might create balancing issues.
• Otherwise, the balances in the suspense account may increase to significant proportions and become difficult to manage over time.
• Contrarily if the credit side of your trial balance is larger than the debit side, the difference is recorded as a debit to the account.

For example, if an investor who sells off securities worth $10,000 plans to promptly reinvest that money into other financial instruments, the $10,000 would be temporarily moved to a suspense account until it is reinvested. At times, all the required details for a particular transaction are not available but it still needs to be recorded in order to keep the accounting books updated. Instead, it is used to give some leeway to the accountant to find the true nature of some transactions to make the ledger books more robust.

Reconciliation: How to Reconcile Suspense Accounts?

To close the suspense account, credit the suspense account and debit the supplies account for the purchasing department. An accountant was instructed to record a significant number of journal entries written by the controller of a large company. Unfortunately, there was one amount that did not have an account designated. In order to complete the assignment by the deadline, the accountant recorded the „mystery” amount in the general ledger Suspense account. When the controller is available, the accountant will get clarification and will move the amount from the Suspense account to the appropriate account. All suspense account items should be eliminated by the end of the fiscal year. Otherwise, a company is issuing financial statements that contain unidentified transactions, and which are therefore incorrect.

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. To properly record the transaction, the business needs to know who it is from. If the transaction is from an unknown customer, it can temporarily be recorded into the suspense account. The funds may be allocated to the suspense account for payments that are not fully received.

Definition of suspense account:

You might receive a partial payment from a customer and be unsure about which invoice they’re paying. Hold the partial payment in a suspense account until you contact the customer. When you find out the invoice, close the suspense account and move the amount to the correct account. List the suspense account under “Other Assets” on your trial balance sheet. After you make corrections, close the suspense account so that it’s no longer part of the trial balance.

The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes. The word in the example sentence does not match the entry word. Suspense accounts are used by accountants in many different types of situations.

Suspense account example

The suspense account may be used when other issues occur with a payment, such as incorrect information or a technical problem with the transaction. If the business makes a payment toward a customer, but their bank account information changes, they can place the transaction into the suspense account until it is resolved. It identifies where the money came from and allows the money to be used as payment to various polices.

• In the business world generally, a suspense account is a section of a company’s financial books where it can record ambiguous entries that need further analysis to determine their proper classification.
• The accountant recorded the “unclassified” amount in the general ledger suspense account to complete the assignment by the deadline.
• Using a suspense account allows the accountant to review each individual transaction in the account before they clear it.
• Recently I switched to manager io instead of an excel sheet to optimize the accounting.

Emilie is a Certified Accountant and Banker with Master’s in Business and 15 years of experience in finance and accounting from corporates, financial services firms – and fast growing start-ups. He will move the amount from the Suspense account to the appropriate account as soon as he gets more information about the nature of the transaction. Hence this account helped him to keep the transaction in books of accounts and, at the same time, deter him from putting it under the wrong category. The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless.

Assets not yet received

When customer withdrawal completes, the money moves from suspense account to the agent’s account who facilitated the cash withdrawal. A company generates many transactions over the course of its operations. It can sometimes happen that the transactions might have missing information, or incorrect data have been entered on record. But a company must record every transaction, and in such circumstances, Suspense Account is used. Likewise, if the trial balance shows debits are larger than credits, the difference should be entered as a credit because the amount will be cleared once the difference has been reconciled. A partial payment occurs when a customer does not pay the full amount owed for a transaction. 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.

Auditors and internal control advisors are particularly concerned about the suspense balance and inquire management about the same. As the trial balance is amended directly, only a one-sided journal entry into the suspense account is needed to record the difference. Whether intentional or accidental, partial payments can be tricky to match up to invoices. You can hold them in a suspense account until you know which account they should move to.

Related Definitions

Accordingly, there should be a daily measurement of the balance in the suspense account, which the controller uses as the trigger for ongoing investigations. 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. When the business receives a payment that it does not know how to categorize, the transaction is temporarily placed in the suspense account. General suspense accounts are used in a business to place funds temporarily.

A https://www.bookstime.com/ is an account used temporarily to carry doubtful entries and discrepancies pending their analysis and permanent classification. No, unlike mortgage escrow accounts, the money in a mortgage suspense account doesn’t earn any interest for the borrower. The amount of money held in suspense account is referred to as the „suspense balance.” Similarly, if a borrower pays more than they owe for a particular month—without designating how those funds should be applied—the servicer may put the extra money into a suspense account for the time being. Mortgage servicers can use a suspense account when a borrower falls short on a monthly payment or breaks up their monthly payment into partial amounts.