01-14-2005, 06:25 AM
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.
In This imaginative World Nothing is Impossible
(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.
In This imaginative World Nothing is Impossible
