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Accounting Process of Suspense Account
If the 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.
A 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 the 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 a clear understanding.
ABC Enterprises furnishes you with the following information. Prepare financial statements.
Trial Balance of ABC Enterprises
Balance Sheet of ABC Enterprises
Suspense account makes the trial balance agree and facilitates the further preparation of financial statements. A suspense account can be placed on either side of the balance sheet which depends on the placement in the trial balance.