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Suspense Accounts

A suspense account is a temporary account specially created in the general ledger to record the following:

  • An amount to be posted to an account which could not be appropriately identified. The amount to be posted is entered in the suspense account pending the determination of the proper account. Once an account is recognized as the appropriate one, a double entry is made to close the suspense account and transfer the amount to the right account.
  • An amount received and whose source is unknown as can happen on a bank statement. A suspense account is opened to record the amount until the source is identified. Once the source is known, the appropriate account can be debited or credited with the amount in the suspense account which is then closed.
  • More commonly, the suspense account is used to record the amount of difference between the two totals in the trial balance that causes it to unbalance.

Every trial balance must balance if we have posted the entries and done the additions correctly in the ledgers. But sometimes it can happen that the totals in the trial balance are not equal. When it happens, we should try very hard to find the cause or causes of the difference and do the corrections.

If the errors cannot be found, we still need to balance the trial balance as the final accounts have to be prepared. We balance the trial balance by inserting an amount of the difference between the two column totals in the column that has the smaller total so that the two totals equal each other. The amount of the difference is posted to a suspense account. This allows the final accounts to be finalized without delay.

For example, the trial balance below couldn’t balance due to a shortage of $55 in the debit total.

Trial Balance as on 31st December, 20X1

Debit Credit
$ $
Total of all the accounts listed in this trial balance 79,945 80,000
Difference transferred to suspense account 55
80,000 80,000


Suspense Account

Date Particulars Folio Amount Date Particulars Folio Amount
$ $
20X1
Dec 31 Diff. per trial balance 55

The suspense account is meant to be a temporary account. When the error or errors are discovered later, they must be corrected by means of a journal entry for each correction with an explanatory note, and then posted to the affected accounts.

For example, it was later discovered that the discount allowed of $55 to a customer was correctly credited in the debtor’s account but the discounts allowed account was overlooked. Before posting to the account, a journal entry is required.

Date Accounts Folio Debit Credit
$ $
20X2
Jan 31 Discounts allowed 55
Suspense 55
(Discounts allowed not preciously
posted, now posted)


Suspense Account

Date Particulars Folio Amount Date Particulars Folio Amount
$ $
20X1



20X2


Dec 31 Diff. per trial balance
55
Jan 31 Discounts allowed
55


Discounts Allowed Account

Date Particulars Folio Amount Date Particulars Folio Amount
$ $
20X1
Dec 31 Suspense
55

When the trial balance totals do not agree, there are ways that help to find the errors such as:

  • Divide the difference by two and see if this amount has a same amount in the trial balance. If there is a same amount, it may be that the amount is entered in the wrong side in the trial balance. For example, the amount should be in the credit column but entered wrongly in the debit column, or vice versa.
  • If the difference is divisible by nine, it’s possible there’s transposition of digits in an entry. For example, instead of $235 it was entered as $253. The difference between these two amounts is $18 which can be divided by 9.

When the suspense account is opened, an entry is made in it but there is no corresponding entry in another account. When the error is found and correction made, a double-entry posting is made through journal entries.

The suspense account is shown on the liabilities side of the balance sheet if the account has a credit balance and on the assets side if the suspense account balance is a debit balance. In the above example, the net profit in the profit and loss account is less by $55.

A suspense account is a suspicious item on the financial statements and is likely to be viewed unfavourably by outside parties who may be interested in the business such as investors or potential buyers of the business.