Suspense Account Usage
Definition
The practice of temporarily holding a transaction in a suspense account when its correct classification is unclear, then clearing it to the right account once resolved. A suspense balance at period end signals unfinished work.
Related Terms in Core Accounting
Write-Down
Reducing the recorded value of an asset to reflect a fall in its worth — for example inventory to net realisable value — without removing it entirely. A full removal is a write-off.
Capital Account
The equity account recording the owners' investment in a business and their share of accumulated profits. In partnerships and proprietorships it tracks contributions, drawings and profit shares per owner.
Drawings
Money or goods an owner takes out of a sole proprietorship or partnership for personal use. Drawings reduce the owner's capital and are not a business expense.
Trial Balance Errors
Mistakes that a trial balance may or may not reveal. A trial balance catches errors that unbalance debits and credits, but not errors of omission, commission, principle or compensating errors, which leave it balanced yet wrong.
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