Accountancy Forum

Salam everyone

I am in module B right now, just a small question I know suspense account is not a very important topic but here goes can anyone tell me about the basics of in which situation is suspense account created and how is it treated. My final accounts chapter is wrapper up and pretty set but ye pale naheen parta. Any help would be greatly appreciated.

Rergards

Nauman-ul-Haq

I prepare accounts up to the ETB stage for final checking and review with the client and often I have to open suspense accounts for the following reasons;

There is a difference on an account e.g. SLCA or Bank and it is too big a difference to be written off.

There is a receipt or payment that I don't know how to analyse.

These are reviewed by the accountant and he meets with the client before he clears the suspense.

Is that what you needed to know?

Annette

A suspense account is a temporary account which can be opened for a number of reasons. The most common reasons are as follows.

(a) A trial balance is drawn up which does not balance (ie total debits do not equal total credits).

(b) The Book Keeper of the business knows where to post the credit side of the transaction, but does not know where to post the debit (or vice versa). For example, a cash payment might be made and must obviously be credited to cash. But the book keeper may not know what is payment is for, and so will not know which account to debit.

In both these cases, a temporary account is opened up until the problem is sorted out.

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