A suspense account is an account in the general ledger in which amounts are temporarily recorded. The suspense account is used because the proper account could not be determined at the time that the transaction was recorded. When the proper account is determined, the amount will be moved from the suspense account to the proper account.
Arise Awake and Rest Not till the Goal is Achieved.
The term 'suspense' means surprise. You are not sure of certain thing or event. That is why suspense movies are those that keep you in surprise or at a loss as to what is true.
Similarly, there are circumstances when you cannot decide the exact nature of transaction and so cannot decide correct classification for recording a transaction in account. This is suspense. So, you first make entry in a 'suspense account'. This is a temporary or provisional entry. When you find out the correct classification, the suspense account entry is cleared and transferred to correct head of account. Also some times, entry is first made to a suspense account and later transferred to correct heads.
G. K. Ajmani Tax consultant http://gkajmani-mystraythoughts.blogspot.com/
Yes, I agree with Gulshan ji and Mukesh about what a suspense account is and it helped me to regain my knowledge about suspense account which I studied long back when I was in college...
