The difference in trial balance is temporarily transferred to suspense a/c. My Accounting Course  is a world-class educational resource developed by experts to simplify accounting, finance, & investment analysis topics, so students and professionals can learn and propel their careers. Each week he purchases some of the materials needed to manufacture the bakery’s products and he pays for them with the company’s debit card. Last week he purchased a new refrigerator for $300 but due to his busy schedule he failed to send the receipt of the transaction to his accountant. Leah Lobek, Co-Founder of restaurant chain The London Shell Co, reveals that having a suspense account can help ease the admin burden.

There are several situations for holding an entry in a suspense account. Someone on our team will connect you with a financial professional in our network holding the correct designation and expertise. 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. Accelerate adoption and drive productivity and performance.One of the critical success drivers for any software technology is effective user training and adoption.

Why is a suspense account important?

A suspense account can also hold information about discrepancies as you gather more data. Missing or incorrect details can derail your bookkeeping https://www.bookstime.com/ efforts, but you need to record every transaction. Use a suspense account when you’re not sure where to record general ledger entries.

As you can see, there is now a nil balance carried forward in the suspense account. The amount of Suspense Account helps to locate the errors because with the amount of Suspense Account, the accountant can find the errors committed in the past. When trial balance does not agree, in that case the amount of difference can be put on the shorter side of the trial balance as ‘Suspense Account’ and thus, the trial balance stands closed. Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications. Our work has been directly cited by organizations including Entrepreneur, Business Insider, Investopedia, Forbes, CNBC, and many others. Finance Strategists is a leading financial education organization that connects people with financial professionals, priding itself on providing accurate and reliable financial information to millions of readers each year.

Example #4 – Trial Balance

While the use of accounting software should be making it even easier to keep on top of your accounts, it is inevitable that one or two entries will slip through the net. Keeping an up-to-date record and regularly reviewing your suspense account will help you make sure all is well when it comes to reporting your finances. However, all that being said, due to how suspense accounts work, it may often be hard to determine the nature of the entry accurately enough to use the categories above. In this case, you may choose to have a single suspense account entry until you figure out where the transaction should be recorded. In branchless banking (BB) – banking through mobile for the unbanked – these accounts are used for ‚money-in-transit‘.

BlackLine solutions address the traditional manual processes that are performed by accountants outside the ERP, often in spreadsheets. The revenue cycle refers to the entirety of a company’s ordering process from the time an order is placed until an invoice is paid and settled. The inability to apply payments on time and accurately can not only lock up cash, but also negatively impact future suspense account sales and the overall customer experience. Our solutions complement SAP software as part of an end-to-end offering for Finance & Accounting. Suspense accounts on balance sheets are not desirable since they might make it difficult to balance the books appropriately. An accountant was instructed to record a significant number of journal entries written by the controller of a large company.