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Simple English definitions for legal terms
suspense account
Read a random definition: capacitate
A quick definition of suspense account:
A suspense account is a temporary record used in bookkeeping to keep track of money that is not yet identified or posted in the appropriate ledgers and journals. It helps to break down lump-sum receipts or expenditures into several transactions before posting. It is a useful tool for bookkeepers and accountants, but it does not appear in a final financial statement.A more thorough explanation:
Definition: A temporary record used in bookkeeping to track receipts and disbursements of an uncertain nature until they are identified and posted in the appropriate ledgers and journals. A suspense account does not appear in a final financial statement.
Example: A company receives a payment from a customer, but the customer did not specify which invoice the payment was for. The company would temporarily record the payment in a suspense account until they can identify which invoice it belongs to and post it in the appropriate ledger.
This example illustrates how a suspense account is used to track transactions of an uncertain nature until they can be properly identified and recorded in the appropriate accounts.