In case a suspense a/c is not closed at the end of an accounting period, the balance in suspense account is shown on the asset side of a balance sheet if it is a “Debit balance”. In case of a “Credit balance”, it is shown on the liability side of a balance sheet.
What is a suspense account on balance sheet?
Definition of Suspense Account A suspense account is a general ledger account in which amounts are temporarily recorded. The suspense account is used because the appropriate general ledger account could not be determined at the time that the transaction was recorded.
What is suspense account when it is prepared?
A suspense account is an account in the general ledger in which amounts are temporarily recorded. A suspense account is used when the proper account cannot be determined at the time the transaction is recorded. Suspense accounts should be cleared at some point, because they are for temporary use.
What must be done with a suspense account before preparing a statement of financial position?
If there is a difference on the trial balance, then a suspense account is used to make the total debits equal the total credits: The balance on the suspense account must be cleared before final accounts can be prepared.
Does suspense account go on balance sheet?
You’re preparing a trial balance If the debits are larger than credits, record the difference as a credit. List the suspense account under “Other Assets” on your trial balance sheet.
What is a suspense account used for in accounting?
A suspense account is a catch-all section of a general ledger used by companies to record ambiguous entries that require clarification. Suspense accounts are routinely cleared out once the nature of the suspended amounts are resolved, and are subsequently shuffled to their correctly designated accounts.
What is suspense account in simple words?
A suspense account is a section of a general ledger where an organization records ambiguous entries that still need further analysis to determine their proper classification and/or correct destination.
