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Home/Questions/Q 60873
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Angie
Angie
In: Category - Accounting Others

Where is suspense account entered if shown in trial balance?

suspense accounttrial balance
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    1. Dheeraj
      2020-08-26T18:24:39+05:30Added an answer on August 26, 2020 at 6:24 pm
      This answer was edited.

      Accounting Process of Suspense Account

      If suspense account is shown in the trial balance then it will be directly shown in the statement of financial position (say- Balance Sheet). If the suspense account appears on the debit side of the trial balance then it will be shown in the Asset side of the balance sheet or If the suspense account appears on the credit side of the trial balance then it will be shown in the Liabilities side of the balance sheet.

      Suspense account appears in the trial balance if any of either side of the trial balance doesn’t agree (or) if any error occurs at the preparation of trial balance. A suspense account is a temporary account and it gets closed once if the particular error is found and rectified

      Suspense account never appears in the Income Statement because income statements are prepared to ascertain gross profit (or) net profit. If the income side exceeds the expenses side then it is gross profit or vice-versa.

      I would like to add a practical example and a snippet of the balance sheet to my explanation part for clear understanding.

      Practical Example

      ABC Enterprises furnishes you with the following information. Prepare financial statements.
                                                              Trial Balance of ABC Enterprises

      Trial Balance with suspense account

                                                       Balance Sheet of ABC Enterprises

      Balance Sheet of suspense account

      Conclusion

      Suspense account makes the trial balance to agree and facilitates in the further preparation of financial statements. Suspense account can be placed on either side of the balance sheet which depends on the placement in the trial balance.

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