Meaning of Suspense Account - SS1 Accounting Lesson Note

A suspense account is a temporary account used to record transactions or balances that cannot be immediately identified or allocated to a specific account. It serves as a holding account until the appropriate account can be determined, and the transaction can be properly recorded.

For example, if a company receives a payment from a customer, but the customer does not provide enough information to identify which account to credit, the payment would be recorded in a suspense account until the proper account can be identified.

Suspense accounts are often used as a last resort when all attempts to identify or allocate a transaction fail, and they should be cleared as soon as possible to ensure accurate financial reporting.