Month-end close Updated November 2026

Suspense account

A suspense account is a temporary general ledger account used when a transaction must be recorded but its correct account is not yet known, for example an unidentified deposit on the bank statement. Each item is investigated and moved to its proper account, and the balance should be nil at every month-end.

Syntax

Park: Dr Cash / Cr Suspense (unknown receipt). Clear: Dr Suspense / Cr Accounts Receivable (customer identified)

Part	What it is
`Unidentified receipt`	Dr Cash / Cr Suspense until the payer is known
`Unidentified payment`	Dr Suspense / Cr Cash until the purpose is known
`Trial balance difference`	Older bookkeeping use: a plug to balance until the error is found
`Aging`	Every item has a date and an owner; nothing older than one close

Examples

Bank statement shows a 750 deposit with no reference

Result: Dr Cash 750 / Cr Suspense 750. Reconciliation balances; the item is listed for follow-up.

Two days later customer Ortiz confirms the 750 was for invoice 1187

Result: Dr Suspense 750 / Cr Accounts Receivable (Ortiz) 750. Suspense returns to zero.

Month-end suspense balance: 750 credit (Ortiz, cleared on the 3rd) and 120 debit (unknown card charge)

Result: The schedule lists both with dates and status; the 120 is investigated and reclassified to the right expense or to a receivable from the cardholder.

Common mistakes

Using suspense to make the bank reconciliation balance and then forgetting it: it is a holding account, not a solution.
Letting items age for months: set a rule that nothing older than 30 days stays without manager approval.
Netting debits and credits in suspense: a zero net balance can hide two large errors; list each item.

Practice Suspense account

These drills check your answer on live data, free, no account needed.

The full workoutClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.

Questions

Is a suspense account an asset or a liability?

Neither by nature; it takes whichever balance the parked items leave. On the balance sheet it is shown as an other asset or other liability depending on the sign, ideally nil.

What is the difference between suspense and clearing accounts?

A clearing account is used on purpose for a known flow (payroll clearing, undeposited funds) and empties automatically. Suspense holds unknowns.

Reconciliation does not balanceWhen the adjusted bank and book balances differ, the difference tells you where to look: divisible by 9 means a transposition, twice an item means a sign.
Balance sheet reconciliationA balance sheet reconciliation supports each ledger balance with independent evidence: a bank statement, an aging, a schedule or a roll-forward. Sign-off.
Correcting entryA correcting entry fixes a mistake in a posted transaction: reverse the wrong part and record the right one, or post the net difference. Examples by error.
Reconciliation controlsThe internal controls around reconciliations: the preparer does not handle cash, a reviewer signs off, statements come from the bank, items are aged.