A suspense account is an account in the general ledger that temporarily stores any transactions for which there is uncertainty about the account in which they should be recorded.

An entry into a suspense account may be a debit or a credit. It is useful to have a suspense account, rather than not recording transactions at all until there is sufficient information available to create an entry to the correct account(s). Otherwise, larger unreported transactions may not be recorded by the end of a reporting period, resulting in inaccurate financial results.

Regularly review the items in a suspense account, with the objective of shifting transactions into their appropriate accounts as soon as possible. Otherwise, the amounts in the account can grow to quite substantial proportions, and be very difficult to deal with months later, especially if there is minimal documentation of why transactions were initially placed in the account.

Accordingly, there should be a daily measurement of the balance in the suspense account, which the controller uses as the trigger for ongoing investigations. Further, it is useful to track which transactions are repeatedly shunted into the suspense account, so that systems can be enhanced to make it easier to properly identify these items in the future, thereby keeping them out of the suspense account.

The suspense account is classified as a current asset since it is most commonly used to store payments related to accounts receivable. It is possible to also have a liability suspense account, to contain accounts payable whose disposition is still being decided. If so, the liability suspense account is classified as a current liability.

All suspense account items should be eliminated by the end of the fiscal year. Otherwise, a company is issuing financial statements that contain unidentified transactions, and which are therefore incorrect.