Question

What is a suspense account?

Answer 1

Suspense account

Suspense a/c is an account in which the items are entered temporarily in the books of company before allocation to the correct and final account.

It is used at the time when proper a/c could not be determined in which transaction was recorded.

WHEN TO USE SUSPENSE A/C

While preparing a trial balance.

When you a partial payment.

If you buy a fixed assets but do not receive until it is paid off.

When you dot not know how to classify the transaction.

In all the situation you are required to make a suspense a/c in which transaction are made.

EXAMPLES

1. Car repairs of $62 debited to the motor expense a/c as $26 in error.

2. Balance on sales a/c is $ 5,000 but it is shown as $500 in trial balance.

3. Debit side of cash book overcast by $1,000.