Suspense Account - What is a suspense account?
A suspense account is an account used on a temporary basis for any transaction or balance that cannot be identified
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A suspense account is normally located in the general ledger. Any amount that is posted to the suspense account should be there on a temporary basis only, as this amount needs to be investigated and posted to the correct account.
If you have taken over the accountancy for a company and they have a suspense account it is important to ensure that these amounts are explained, identified, and finally removed and placed in the correct account.
Why is a suspense account necessary?
If a transaction is completed but it is not clear where the transaction came from and/or what it is meant for (it cannot be matched to an invoice or expense, for example), then a suspense account is used to separate that amount until it can be identified and placed in the correct account.
It’s important to keep unidentified amounts in a separate account in order to stay organised and identify them later more easily. These unmatched amounts should not be left in amongst your already-identified transactions. The suspense account gives them a temporary place until they can be properly placed.
If you are unsure about where to place a transaction then it can remain in the suspense account until your bookkeeper or accountant can be reached for advice.
Using a suspense account
The default suspense account code in a chart of accounts is 9999. Alternatively, the transaction can be left in the daybook while you consult your accountant or bookkeeper and the correct account can be determined at a later date.
Most accounting systems contain a suspense or mispostings account in their chart of accounts, but this is something that you should avoid using unless there are no other options. If you don’t have an account for a specific expense then you may need to create a new one within your chart of accounts.
Suspense account and accounting software
Today, online accounting and invoicing software like Debitoor gives you the tools to easily manage your income and expenses, from anywhere. When it comes to your transactions, automatic bank reconciliation can help you match your payments in an instant.
Unmatched amounts are clearly indicated, meaning you can go back and match them easily once you know where they belong. The suspense account is built-it, effectively allowing you to manage all transactions, even if they have not yet been categorised.
Debitoor also has an ‘Other Income’ option, where you can place income that cannot be matched to an invoice.