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If the credits in the trial balance exceed the debits, record the difference as a debit–and vice versa–to make both columns of the trial balance report balance. 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. Regularly review the items in a suspense account, with the objective of shifting transactions into their appropriate accounts as soon as possible. Accordingly, there should be a daily measurement of the balance in the suspense account, which the controller uses as the trigger for ongoing investigations.
Once you have checked invoices and other correspondence and confirmed with the client or customer, you can then move the amount to the appropriate account. One situation in which having a suspense account comes in handy is when you are preparing your trial balance. The trial balance is the closing balance of a given account, calculated at the end of a certain reporting period.
Suspense Accounts in Accounting
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. After you make corrections, close the suspense account so that it’s no longer part of the trial balance. https://www.bookstime.com/ For example, if your company’s opening ledger has account numbers 1-98, the next account number available to your business will be 100. However, it is recommended to keep a minimum of 25 ledger accounts in order to avoid errors when posting entries.
When the trial balance shows credits exceeding debits, the difference should be recorded as a debit to reflect the temporary nature of those funds. More than 4,000 companies of all sizes, across all industries, trust BlackLine to help them modernize their financial close, accounts receivable, and intercompany accounting processes. Timely, reliable data is critical for decision-making and reporting throughout the M&A lifecycle. Without accurate information, organizations risk making poor business decisions, paying too much, issuing inaccurate financial statements, and other errors. Gain global visibility and insight into accounting processes while reducing risk, increasing productivity, and ensuring accuracy.
Examples: Suspense Account Journal Entries
Most suspense accounts in small business accounting are cleared out on a regular basis. Transfer suspense account entries to their respective accounts to bring the suspense balance to zero. You eventually transfer entries from the suspense account suspense account to just a permanent account. Most companies clear their suspense accounts on a monthly or quarterly basis. A typical suspense account example is running a trial balance to check a double-entry balance sheet.
Can a suspense account be an expense account?
A suspense account is an account in which you record any unclear revenue or expenses for a client until they're able to clarify them. Suspense accounts allow accountants to monitor ambiguous transactions separate from a company's or individual's finances.
