Bookkeeping basics

The suspense account

A temporary parking place for a difference; never in the statements.

Draft: not yet reviewed by a teacher

Why it exists

The statements cannot wait until every error is found. A suspense account balances the trial balance at once and is cleared as the corrections are made. It shows that the work is not finished.

Key rules

If debits exceed credits, open suspense with a credit for the difference, and the other way round.
Suspense is touched only by errors that broke the equality of debits and credits: a one-sided entry, unequal amounts, two entries on the same side, an omitted balance, a casting error.
Errors that keep debits equal to credits (omission, principle, reversal and so on) are corrected without suspense.
In each correcting journal, suspense takes the side opposite the line that fixes the account.
After all corrections the suspense balance is nil; it never appears in the statement of financial position.

Examples

Trial balance: Dr 186,350, Cr 184,900. The difference of 1,450 goes to Cr Suspense 1,450.

A cash sale of 1,180 was debited to bank but not posted to sales: Dr Suspense 1,180, Cr Sales 1,180
A telephone bill of 270 was credited to bank but debited to telephone as 540: Dr Suspense 270, Cr Telephone 270
Suspense: 1,180 + 270 = 1,450 debit against 1,450 credit, balance nil
Profit increases by 1,180 + 270 = 1,450

Clearing suspense to nil

How it works

For each error ask which side of the entry is missing or wrong. Fix that side, and put the opposite line of the journal to suspense.

If a balance is left on suspense after all the corrections, some error has not been found or was only partly corrected.

Traps

Taught in the course

Key rules

If debits exceed credits, open suspense with a credit for the difference, and the other way round.

Suspense is touched only by errors that broke the equality of debits and credits: a one-sided entry, unequal amounts, two entries on the same side, an omitted balance, a casting error.

Errors that keep debits equal to credits (omission, principle, reversal and so on) are corrected without suspense.

In each correcting journal, suspense takes the side opposite the line that fixes the account.

After all corrections the suspense balance is nil; it never appears in the statement of financial position.