What is suspense Account?

Suspense Account

Sometimes, in spite of best efforts of an accountant, all the errors are not located and the Trial Balance does not tally. In such a situation, to avoid the delay in the preparation of final accounts, the difference in the Trial Balance is placed to a newly opened account known as  "Suspense Account" and the Trial Balance Tallies. If the debit side of the Trial Balance exceed the credit side , the difference will be put on credit side of the suspense Account and if the credit side of the Trial Balance exceed the debit side, Suspense Account will be debited. After including the balance of suspense Account in the Trial Balance. It will appear to be tallied.

Later, when the errors are located, the rectification entries will be passed with the help of the Suspense Account. Therefore, When all the errors have been located and rectified, the suspense Account will automatically Stand closed. If the suspense Account still shows a balance, it will be to the Balance Sheet on the assets side if it shows a debit balance or on the liabilities side if it shows a credit balance.