Concept And Meaning Of Suspense Account And Utility Of Suspense Account

What Is Suspense Account ?

The account opened to rectify the previous year's one-sided errors is called suspense account. Suspense account is opened for a temporarily period only. Suspense account shows no balance after rectification of all errors and it disappears automatically. Opening of suspense account does not mean that the errors detected should be left unrectified.

Suspense account is opened with a purpose to correct the previous year's one-sided errors. It is used for temporary period only. One-sided errors affect only one side of account. Therefore, rectification of one-sided errors is done by opening suspense account. Opening suspense account makes possible to prepare journal entries for correcting one-sided errors. Suspense account shows no balance after rectifying one-sided errors and disappears automatically.

Utility Of Suspense Account

Suspense account is opened when one-sided errors detected after preparation of trial balance. It is the account opened for temporary period till one sided errors are rectified. Suspense account is debited when the debit total of trial balance remain less. It is credited by the amount short of the credit total of trial balance. The suspense account does not show any balance after the rectification of all one-sided errors. Therefore utilities for opening suspense account are as follows.
* Suspense account helps to carry one-sided errors amounts to suspense account

* Suspense account helps to show the total amount of errors needed to be rectified

* Suspense account helps to show the different accounts where in rectifications are to be made

* Suspense account helps to draft final account along with checking of errors simultaneously.