What Is a Suspense Account?
The temporary account that holds an unexplained trial balance difference.
Home › Accounting Glossary › Suspense Account
| Type | Temporary holding account |
|---|---|
| Cleared when | Errors are found and corrected |
| Topic | Financial accounting · Error correction |
Suspense account in plain English
If debits and credits do not agree, the statements cannot be finished. Putting the difference in a suspense account lets the books agree for now while the bookkeeper hunts for the cause. The balance should return to zero once every error is corrected.
Which side?
- Debits less than credits: debit the suspense account for the difference.
- Debits more than credits: credit the suspense account for the difference.
Worked example
A trial balance shows debits of 50,000 and credits of 50,600. Debits are 600 short, so debit Suspense 600 and the totals agree at 50,600.
Later it is found that a 600 receipt was credited to the customer’s account but the matching debit to Cash was never posted. The correction is: debit Cash 600, credit Suspense 600. The suspense account is now cleared to zero.
- Putting the difference on the wrong side.
- Leaving a suspense balance in the published statements. It should be cleared first.
Frequently asked questions
What causes a suspense balance?
Errors that make debits and credits unequal, such as one-sided postings, wrong additions or figures posted to the wrong amount.
Is a suspense account an asset or a liability?
Neither permanently. A debit balance is treated like an asset and a credit balance like a liability until the error is found.
Does a suspense account fix the errors?
No. It only holds the difference. The errors must still be found and corrected.
Keep learning
This page is for general learning. Accounting rules vary by country and standard.