I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

Suspense accounts, as well as being used to correct some errors, are also opened when it is not known 

immediately where to post an amount. When the mystery is solved, the suspense account is closed and 

the amount correctly posted using a journal entry.  

A 

suspense account

 is an account showing a balance equal to the difference in a trial balance. 

 

A suspense account is a temporary account which can be opened for a number of reasons. The most 

common reasons are as follows. 

(a) 

A trial balance is drawn up which does not balance (ie total debits do not equal total credits). 

(b) 

The bookkeeper of a business knows where to post the credit side of a transaction, but does not 

know where to post the debit (or vice versa). For example, a cash payment might be made and 

must obviously be credited to cash. But the bookkeeper may not know what the payment is for, 

and so will not know which account to debit. 

In both of these cases, a temporary suspense account is opened up until the problem is sorted out. The 

next few paragraphs explain exactly how this works. 

2.5 Use of suspense account: when the trial balance does not balance 

When an error has occurred which results in an imbalance between total debits and total credits in the 

ledger accounts, the first step is to open a suspense account. For example, an accountant draws up a 

trial balance and finds that total debits exceed total credits by $162. 

They know that there is an error somewhere, but for the time being they open a suspense account and 

enter a credit of $162 in it. This serves two purposes. 

(a) 

As the suspense account now exists, the accountant will not forget that there is an error (of $162) 

to be sorted out. 

(b) 

Now that there is a credit of $162 in the suspense account, the trial balance balances. 

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CHAPTER 16  

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  CORRECTION OF ERRORS