The accounts are used to record the entries that are uncertain. The suspense account entries will be moved to the designated accounts as soon as the account is identified. Further, it also guarantees that your accounts are balanced and that the errors won’t be seen on the system.
If you face any issues with your accounts in QuickBooks, feel free to get in touch with our experts.
What Exactly is a Suspense Account in QuickBooks?
The suspense accounts are the accounts that are used to keep a record of uncertain entries permanently or temporarily. For that, you have to make a suspense account whenever the trial balance is having insufficient balance or whenever a translation is recorded that is unidentified. The account stores all the transactions that can’t be categorized immediately because of the missing data.
What is Example for Suspense Account in QuickBooks?
A customer submits a $1,000 payment but does not identify which open invoices it would cover. The accounting team temporarily lodges the $1,000 in the suspense account until it can decide which invoices to charge. The initial transaction in this instance to add the monies to the suspense account is:
| Debit | Credit | |
| Cash | $ 1000 | |
| Suspense Account | $ 1000 |
The accounting team calls the client, determines which invoices should be paid with the $1,000, and transfers the money with the following entry:
| Debit | Crediit | |
| Suspense Account | $ 1000 | |
| Accounts Receivable | $ 1000 |
Let’s move on to the next section to identify what are the steps for suspense account in your system.
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Why Use the Suspense Account in QuickBooks?
There are multiple case scenarios where you can use the account in QB.
- When you cannot verify who sent the payment, you can hold it in a suspense account.
- If you found a difference in the matching balance for the accounts. Then you can create a journal entry in a suspense account in QuickBooks.
- When you buy a fixed asset on installment payments, you do not receive it until you pay the full amount. Then you can put the expenses in the suspense account.
- If you have received a partial payment and you wish to show it as a single entry after the full payment is received. There is only one method to determine this if you cannot verify who sent you the payment.
Let’s move on to the next section to understand the case scenarios where you can use the suspense account.
Common Situations that Create Suspense Account in QuickBooks
There can be different situations when the suspense accounts are made. The common situations are mentioned below.
- When you are setting up an account for the first time, the opening balance should match the previous records. If the amount is mismatched, QuickBooks may add it to the suspense account.
- During bank reconciliation, any unmatched deposits or withdrawals may be temporarily assigned to a suspense account.
- Transactions imported from bank feeds may lack details that make them unassignable to any category, such as income, expenses, or transfers.
- When you are migrating the data from one accounting system to another, QB may add the balances to the suspense account.
- There can be payments that are received without references, or invoices can be posted to the suspense account.
The above-mentioned are the cases when the transactions are classified or kept under a suspense account.
How to Set Up a Suspense Account in QuickBooks Effectively?
To begin the process, QuickBooks Online automatically creates two default accounts when you set up VAT or other sales taxes: the payable account and the suspense account. But, if needed, you can create a suspense account by heading to the Charts of Accounts section.
Step-by-Step Guide to Set Up a QuickBooks Suspense Account
- From the bottom, tap on the Account option.
- Click on the New button.
- Choose the Account Type as Expense.
- Tap on Continue.
- Then, click on the name of your account from the Account Name section.
- Write the account number in the Number area.
- Tap on the Save and Close option.
Step-by-Step Guide to Clear the Suspense Account in QuickBooks
- Go to the Inquiry menu.
- Head to the Account menu.
- Then, go to the Current option.
- Tap on OK.
- Choose the Conditions.
- Go to the Field area.
- Then choose the Account option.
- Select the Equal to in the Operator option.
- Input the Suspense account number in the Value section.
These were the steps to help you set up or clear the suspense account in QuickBooks Desktop.
Conclusion
In this blog, we have talked about the suspense account in QuickBooks. We have listed what the account is and why we use the account. We have also written case scenarios on how you can set up the account in your application and how you can clear the account. If you need any help to set up the account, feel free to get in touch with our experts.
Frequently Asked Questions (FAQs)
A. To edit the account from the account charts, you have to clear the suspense account; you also need to move the transactions to the account in the charts.
A. The profit and loss accounts are the items that are expenses or income for the user. The item will be sent to a temporary account known as the suspense account.
A. A suspense account is a generic account that holds transactions that cannot be identified or are of a temporary nature until they can be placed in their respective accounts. Based on the nature of transactions, one can also categorize suspense accounts. This depends on the nature of the suspense account, as well as some of the transactions you wish to carry out using the account. For example, you can create two suspense accounts, for example, the brokerage suspense account and the mortgage suspense account.
Gabby Taylor, combines financial expertise with literary prowess. With over a decade in finance, she crafts insightful narratives on navigating fiscal complexities