This article will help us  understand the concepts and the usages of Suspense account.It is an account in the general ledger that temporarily stores details of the transactions when ever there is uncertainty about the account in which they should be recorded.Once the accounting staff investigates and clarifies the purpose of this type of transaction, it shifts the transaction out of the suspense account and into the correct account(s). 

Why is it required in the first place and can we not enter the transaction only after the complete information is obtained ? 

It is useful to have a suspense account, rather than not recording transactions at all until there is sufficient information available to create entry to the correct account(s). Otherwise, larger unreported transactions may not be recorded by the end of a reporting period, resulting in inaccurate financial results.

Usage of Suspense accounts can be observed from the following examples:

Customer sends in a payment for $4,000 but does not specify which open invoices he intends to pay. Until the accounting staff can ascertain which invoices to charge, he temporarily parks the $4,000 in the suspense account. In this case, the initial entry to place the funds in the suspense account is:

The accounting staff contacts the customer, identifies which invoices are to be paid with the $4,000, and shifts the funds out of the suspense account with this entry                        

As another example, a supplier delivers an invoice for $500 of services, which is payable in 30 days. The accounting staff is uncertain which department will be charged with the invoice, so the accounting staff records the following initial invoice with the suspense account till the actual department account that needs to charges is identified

The suspense account is classified as a current asset, since it is most commonly used to store payments related to accounts receivable.It is possible to also have a liability suspense account, to contain accounts payable whose disposition is still being decided.If so, the liability suspense account is classified as a current liability.Hence Suspense account can be Asset/Liability account.

Suspense Account setup in Fusion Financials :

The general ledger needs to enabled to make use of suspense account feature and the default suspense account has to be entered in the Ledger Processing options - Select 'Enable Suspense' for General Ledger and SubledgerAccounting.

If suspense account is not enabled in Journal Processing option of the ledger, then the system will not allow us to post unbalanced journal entries.But if this is enabled then we will be able to post unbalanced entries as system internally generates the contra entry based for this unbalance journal based on the default suspense account mentioned in the Journal Processing options of the ledger

And we can also define suspense accounts to be used for a journal source and journal category combination for a ledger from Manage Suspense account page as shown below :  

Deepthi Reddy

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