Where is suspense account shown in the financial statements?

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. In accounting for small business, most suspense accounts are cleared out on a regular basis. Move suspense account entries into their designated accounts to make the suspense balance zero. BlackLine Journal Entry is a full Journal Entry Management system that integrates with the Account Reconciliation product. It provides an automated solution for the creation, review, approval, and posting of journal entries, and is also useful in creating entries to distribute suspense account transactions to the appropriate accounts.

Standardize, accelerate, and centrally manage accounting processes – from month-end close tasks to PBC checklists – with hierarchical task lists, role-based workflows, and real-time dashboards. The difference amount is temporarily recorded in a suspense a/c and should be cleared at some point as it possesses a control risk. It is used to mitigate risk which is addressed and when the errors are rectified. Unfortunately, the best section may not be known at the time of the receipt, and it is hard to say where you will find the suspense account in your own chart of accounts and general ledger. When the right account is determined or the error is rectified, the amount shall be moved from the suspense account to its proper account. A general ledger is where a business records its assets and liabilities on an ongoing basis, broken into separate categories or accounts.

Brokerage firms also use suspense accounts to, for example, keep track of a customer’s money between the time they sell an investment and when they reinvest that money. Suspense accounts in a company’s general ledger typically contain entries where there are uncertainties or discrepancies that need to be resolved. In another scenario, a customer might make a payment but fail to specify which of several outstanding invoices they intended to pay off with those funds.

Suspense account example

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• The amount of money held in suspense account is referred to as the “suspense balance.”
• Until you actually make the withdrawal from the agent or financial institution, the remittance money may be stored in their suspense account.
• Later, you decide to bill the supplies account of the purchasing department.
• After provisional balancing of the trial balance, financial statements are prepared with the suspense account while the difference in the trial balance is thoroughly examined.
• Suspense accounts help you avoid recording transactions in the wrong accounts.
• 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.

Drive accuracy in the financial close by providing a streamlined method to substantiate your balance sheet. A suspense account is an account used to temporarily store transactions for which there is uncertainty about where they should be recorded. Once the accounting staff investigates and clarifies the purpose of this type of transaction, it shifts the transaction out of the suspense account and into the correct account(s). The purpose of suspense account entries is to temporarily hold uncategorized transactions. Close the account after moving the entry to the correct permanent account. When you open an accounting suspense account, the transaction is considered in suspense.

Brokerage Suspense Accounts

Businesses also use a suspense account to record transactions when there are delays between the receipt of money and the proper assignment in the ledger. For example, money may be transferred to a bank but not deposited into an account, or when money is received by a customer before a policy or contract is written. 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. 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.

A suspense account may also be established if further information is needed to finalize the transaction or if there are other complications that need to be resolved. In mortgage servicing, the servicer can use a suspense account to park funds temporarily if a borrower has made only a partial payment for that month. In investing, a suspense account is a type of brokerage account where a customer’s proceeds from selling an investment may be recorded until the customer uses the money to invest in something else.

What is a Suspense Account (with examples)?

If the trial balance’s credits exceed the debits, record the difference as a debit. On your trial balance sheet, include the suspense account under “Other Assets.” After you’ve made the necessary changes, close the suspense account so it’s no longer a part of the trial. It aids in ensuring that all transactions are recorded under the appropriate headings. It improves the quality of bookkeeping and the proper representation of all transactions as a result.

Most companies clear their suspense accounts on a monthly or quarterly basis. A trial balance is a worksheet with totals of all accounts in the general ledger. Trial balances are usually prepared at the end of the reporting period to make sure that all credits and debits are equal. A suspense account may be added to the trial balance when there are understated or overstated balances that cannot be corrected before the end of the reporting period. 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.

You don’t know who a payment is from

BlackLine’s glossary provides descriptions for industry words and phrases, answers to frequently asked questions, and links to additional resources. Whether new to BlackLine or a longtime customer, we curate events to guide you along every step of your modern accounting journey. Accelerate adoption and drive productivity and performance.One of the critical success drivers for any software technology is effective user training and adoption. Whether you are deploying for the first time or creating a sustainable education program for maximum value creation, explore how you can take the next steps to upskill your users. F&A teams have embraced their expanding roles, but unprecedented demand for their time coupled with traditional manual processes make it difficult for F&A to execute effectively.

• To sustain timely performance of daily activities, banking and financial services organizations are turning to modern accounting and finance practices.
• In reality, under a double-entry bookkeeping method, every kind of error is bound to be identified sooner or later.
• Unlock full control and visibility of disputes and provide better insight into how they impact KPIs, such as DSO and aged debt provisions.
• For efficiency purposes, it is also helpful to track and analyze the entries over time to minimize the reoccurrence of any transactions that cause frequent unnecessary postings into the suspense account.
• Otherwise, a company is issuing financial statements that contain unidentified transactions, and which are therefore incorrect.

Transactions will be more difficult to clear as time passes, especially if there is minimal documentation as to why the transaction was initially placed in the account. Suspense accounts are cleared by reviewing each individual transaction in the account. The objective for reviewing items is to shift the transaction to the appropriate account as soon as possible. The Suspense account above reveals five transactions with some type of error.

Therefore, it is vital to have a process in place to clear out the suspense account on regular basis so that all of the suspense account entries are moved into their designated accounts to zero out the suspense balance. Another instance in which having a suspense account comes in handy is when a trial balance is out of balance, meaning the debit and credit columns do not match. An illustrative example 
Michelle runs a small business and does her own bookkeeping but does not have very much experience in this yet. There have been times throughout the year when Michelle has used a suspense account because she was unsure of the correct accounting treatment. She also thinks there may be other errors which occurred that did not involve a suspense account.

In short, a suspense account is the point of last resort when you need a short-term holding bay for financial items that will end up somewhere else once their final resting place is decided. 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. 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. Transactions that are booked before an allocation is made to the appropriate cost or profit center will be recorded in the suspense account until they can be properly assigned. 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.

Balance Sheet

A typical suspense account example is running a trial balance to check a double-entry balance sheet. If there is an anomaly, this amount is placed in a suspense account until the balance is corrected, and the amount is accurately placed in the right account. Just like any to-do pile, the suspense account cannot hold your mystery amounts forever, and its proper place will need to be determined.

Every executive is committed to ensuring transformational success for every customer. World-class support so you can focus on what matters most.BlackLine provides global product support across geographies, languages, and time zones, 24 hours a day, 7 days a week, 365 days a year. We are here for you with industry-leading support whenever profit and loss 101 and wherever you need it. Automate invoice processing to reduce manual invoicing costs, maintain compliance with e-invoicing regulations, and increase efficiency across your invoice-to-pay process. Create, review, and approve journals, then electronically certify, post them to and store them with all supporting documentation.