Register now or log in to join your professional community.
Suspense account in itself does not serve to detect errors. Suspense account only assist an accountant to warehouse observed errors or imbalance in the books pending when it is resolved and the appropriate corrections are made.
Agreed with the answer professor frank-mwansa
A suspense account is a temporary resting place for an entry that will end up somewhere else once its final destination is determined.
The are two reasons why a suspense account could be opened:
* a bookkeeper is unsure where to post an item and enters it to a suspense account pending instructions.
* there is a difference in a trial balance and a suspense account is opened with the amount of the difference so that the trial balance agrees ( pending the discovery and correction of the errors causing the difference). This is the only time an entry made in the records without a corresponding entry elsewhere.
So a suspense account is simply a temporary account and not a method for detecting errors. It is a holding account so any entry in it must be proper accounted for before financial statements are prepared. However the presence of a suspense account will indicate that something is wrong.
Actually some times a customers make a mistake to write mismatched the account number and figures and or in words so the authority keep those account in a Suspense Account till the customer approach the authority
Do you need help in adding the right keywords to your CV? Let our CV writing experts help you.
