suspense account

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Suspense account

An account used temporarily to record receipts and disbursements that have yet to be classified.

Suspense Account

1. A brokerage or some other account in which an investor deposits securities or cash while he/she decides how to invest it. A suspense account is, by definition, low-risk, as the investor has no intention of losing the deposit while making appropriate investment decisions.

2. An account in which a company deposits and withdraws funds for transactions that have not yet been completed. A suspense account exists in order to keep ongoing transactions off of a balance sheet.

suspense account

In accounting, a temporary “parking place”for entries one does not know how to classify.

Example:  An apartment project receives a cash rent payment left in its mailbox. There is no indication of the name of the tenant, so the manager cannot post the payment to any particular account. Because of the software accounting system, however, the manager cannot create a deposit slip for the payment unless there is a tenant account. To solve the problem, the manager posts the payment to the suspense account, where it will stay temporarily until someone can find out the tenant's name.

References in periodicals archive ?
* Pay particular attention to journal entries in which one side of the entry is to intermediate accounts that might be used to temporarily house fraudulent debits, such as suspense accounts and intercompany accounts.
Although the decision to provide 9.5 per cent interest on PF deposits will result in a deficit of about ` 1,600 crore, this is expected to be covered by a surplus of ` 1,731 crore in the interest suspense account of the EPFO.
The major entry was a debit to the suspense account with a credit to revenues.
For the purposes of the CO2 exam, a suspense account balance will be provided, probably based on the first type of situation I have described, together with a number of errors that have been uncovered.
A suspense account has been opened to make it balance.
The first step is to open a suspense account. As there are more debits than credits, you will need to start with a credit balance of $8,800 to balance the account:
Suspense account Dr Cr TB difference 8,800 Let's consider each piece of information in turn.
Each journal is completed with the suspense account as the opposite entry:
Suspense account Dr Cr Discount received 28,000 TB difference 8,800 Discount allowed 12,000 As the suspense account has not yet been cleared, we must move on to note 2, which tells us that an item of $500 was omitted from the sales records--ie, the sales day book.
As you can see in this case, not all errors will require an adjustment in the suspense account.
The balancing entry will go to the suspense account:
Suspense account Dr Cr Discount received 28,000 TB difference 8,800 Discount allowed 12,000 Purchase ledger control account 7,200 28,000 28,000 The account is now cleared.