| The main advantage of this is that it allows | | | | It not only helps in the tracking of all 'uncertain |
| bookkeepers somewhere to allocate items that they | | | | transactions' that a bookkeeper has to enter, but also |
| are uncertain about. They can then research and | | | | in maintaining the accuracy of any management or |
| identify those items and allocate them to the correct | | | | financial accounting statements that are prepared. It |
| place. Any business that uses accounting software to | | | | helps to ensure that no transactions are overlooked in |
| keep their books and records should use a suspense | | | | the posting process and that the trial balance is correct |
| account if they are at all uncertain about particular | | | | for a particular trading period. |
| transactions at their time of entry. | | | | Sometimes a suspense account is used if there are |
| Certain receipts or invoices for instance, may have | | | | tiny differences that need to be written off; for |
| been allotted an invalid number, or an invoice number | | | | example, it is not unusual for a bank or cash account |
| could be missing from a sales invoice. Once the | | | | to have tiny reconciliation differences. These could be |
| number is corrected, or the invoice number is obtained, | | | | due to rounding up errors or the bookkeeper may |
| then these items can be moved from the suspense | | | | have made a small mistake when entering the data. |
| account and posted to the correct place. In the case | | | | Therefore, these types of differences may be posted |
| of payments, for example, the same logic applies, if | | | | to the suspense account and consequently written off |
| there is a difference of opinion as to which department | | | | to another area under the advice of the accountant. |
| a payment should be charged to, or a payment cannot | | | | Indeed, spending a great deal of time and effort looking |
| be identified on the bank statement, then these should | | | | for the reasons for these tiny differences may not be |
| be temporarily held in the suspense account. | | | | practical. |