Meaning of Suspense Account
The suspense account is a temporary account in which the difference in trial balance is placed and is wiped off when the errors are located and corrected. The suspense account balance will be placed on that side of the trial balance which is found to be shorter in order to make the trial balance agree. After making the trial balance agrees, the next step is to prepare the final accounts. The debit balance of suspense account is written on the assets side of balance sheet while credit balance is written on the liabilities side of balance sheet. It is to be noted that the existence of suspense account is the books is a clear proof of some deficiency in accounting. So it is the duty of the accountant to locate errors in the next accounting period and recertify be set right. Thus suspense account facilitates the preparation of financial statements even when the trial balance has not tallied. It also helps the rectification of errors in the subsequent period. It is important to note that only the errors affecting the agreement of the trial balance are rectified through the medium of suspense account.
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