THIS IS PDF FILE FOR BASIC KNOWLEDGE OF SUSPENSE ACCOUNT

1. -BY
SHIVA, AKANKSHA
TKR INSTITUTE OF MANAGEMENT AND SCIENCE,
HYDERABAD

2. SUSPENSE A/C: It is a temporary account
where you record unclassified transactions
and discrepancy of trail balance[ Dr & Cr]
It acts as a holding account until unknown
transaction is identified & errors are discovered
It can be respiratory for mandatory
transactions(cash receipts, cash disbursements
and journal Entries) enter with invalid account
numbers.
The account specified may not exist
Or it may be deleted/frozen.

3. CREATION OF SUSPENSE ACCOUNT
A suspense a/c is a temporary account
Its opened when trail balance is not balanced
Either the debit balance is higher or credit balance
is higher.
When total credit side is higher, open a suspense a/c
with opening balance on the debit side
When total debit side is higher, open a suspense a/c
with opening balance on the credit side
The opening balance is the difference between total
debit balances and total credit balances

4. When to use suspense account
You’re preparing trail balance When debits and credits don’t match, hold the difference in
a suspense account until you correct it.
You received a partial payment You might receive a partial payment from a customer and be
ensure about which invoice they’re paying. Hold the payment
in a suspense account until you contact the customer
You don’t know who a payment
is from
You might receive a payment but be unsure which customer
paid you. If you don’t know who made the payment, contact
the customer to verify that its their payment and right invoice.
You don’t know how to classify
a transaction
You’re a small business owner, not an accountant. Sometimes,
you might not to know how to classify a transaction. Open
a suspense account and talk to your customer.

5. Trial balance
Dr Cr
5000
4000
3000
Trial balance
Dr Cr
4000
3000
5000
Suspense a/c 2000
Suspense a/c 2000
Here, suspense a/c has debit balance
*it is an asset
Here suspense a/c has credit balance
*it is an liability
Locate the errors &clear suspense a/c
To be cleared out, suspense a/c must have zero balance. Move
suspense a/c entries into
their designated accountants to make the suspense balance zero
7000 7000
7000 7000
EXAMPLE

6. Trial balance as on 31st march, 2017
s.no Name of account L.F Debit Credit
1 Discount allowed
2 Cash in hand
3 capital
4 salaries
5 furniture
6
7
8
9
10
Loan borrowed
lighting
Commission paid
purchases
sales
11 Suspense account
250
4200
50000
12,000
7500
7,000
12,000
3,000
29,050
35,000
24,000
92,000 92,000
-The suspense account is added to the end of a trail balance because a bookkeeper of a business
Is unable to balance the trail balance as the error or errors cannot be found quickly(for the time
It cannot be found, but maybe we can find the error. the suspense account will have a debit or
credit balance , depending on which side we are short.