When a transaction with no valid document is recorded, it causes a mismatch in the account balances. These kinds of transactions are recorded under a temporary account called the Suspense Account. After you record such transactions, you can rectify them. To do so, record them under the relevant account, after which, the balances in the suspense account will be nullified.
Let’s say you receive money from a customer called John for delivering him goods without an invoice. This money can be recorded under the Suspense Account. Later, you can decide to record it under a relevant sales account.
Related Articles
Account
A financial account is a record of the information in an accounting system related to specific assets, expenses, revenues, equity or liabilities. These records can change as events in our businesses happen. Every single transaction is stored in a ...
Trading Account
This account is the very first step for preparing Profit and Loss Statement and Balance Sheet. Direct sales and direct expenses like wages, octroi which are related to the production or procurement of a product are taken into account while preparing ...
Contract Account
When a contract is accepted by contractors, a separate account is then opened for each contract in order to bring together all of the costs that relate to a particular contract, and a serial number is given to the contract which is known and ...
Undeposited Funds Account
In certain cases, you would receive money from your customers which needs to be deposited into bank accounts. The Undeposited Funds Account is used to track and record such amounts. Both the Undeposited Funds and Petty Cash accounts are used to ...
Transactional Email
Automated emails sent from one sender to one recipient, usually related to account activity or a commercial transaction.