To record entries that are uncertain, you can use a suspense account in QuickBooks. This suspense account can be either permanent or temporary. For instance, you find disparities with the trial balance, or you record an entry that you cannot identify. In such cases, you use the suspense account.
However, you can close the Suspense account by the end of the accounting period once you figure out the books. In this guide, we will show you how to Suspense Account setup in QuickBooks, edit it, and more.
What is a Suspense Account in QuickBooks?
Suspense account records entries that are either unidentifiable or made to correct the discrepancies in the matching balance. This decidedly is a temporary account that should be closed at the end of the accounting period.
| What is the Suspense Account List in QuickBooks? There is no suspense account list in QuickBooks. However, you can create a Suspense account in QB to record temporary or unidentifiable entries. |
How to Find Suspense Account in QuickBooks?
You can find the suspense account in the general ledger or charts of accounts. This depends on the transaction, and thus, the suspense account can either be an asset or a liability account. For example, if you choose the account type as expenses, the suspense account will be a liabilities account.
How to Create a Suspense Account in QuickBooks?
To begin with, QB Online (QBO) automatically creates two default accounts when you set up VAT or other sales tax: the Payable account and the Suspense account. However, when the need is, you can create a suspense account in QuickBooks from the Charts of Accounts.
Here’s How to Set Up a QuickBooks Suspense Account
If you wish to create a suspense account list in QB, you can do so from the Charts of Accounts. Follow the steps below to do so.
- Choose Account from the list at the bottom.
- Tap on the New button.
- Now, choose the Account Type as Expense.
- Choose Continue.
- Now, type in the name of your account in the Account Name field.
- Type in the account number in the Number column.
- Finally, choose Save and Close.
This will set up the suspense account for your QuickBooks Online (QBO) company.
When Should You Use the QuickBooks Suspense Account?
You can use a suspense account when you are not sure about the entry that has been made or you wish to make.
- For example, if you cannot verify who sent you the payment, you can put that in the suspense account.
- Imagine another scenario – you find disparities in matching balance. You can create a journal entry in a suspense account in QB to resolve that.
- In another instance, you buy a fixed asset on installment-wise payment, but you do not receive it until you pay it off. You can put that expense in the suspense account.
- You receive a partial payment, and you want to indicate it as one entry when the complete payment is received – you can put that in the suspense account.
Expert’s Tips for Suspense Account
Once you have created your QuickBooks suspense account, make sure to review it regularly. If you don’t, the account will become large with many entries and a larger balance, and you will not be able to sort it out later.
You will not be able to recognize the entries as well in the suspense account. Moreover, we advise that you identify the entries in the suspense account monthly or every accounting period and put them in the accounts they belong to.
At the end of every accounting period, it would be best to close the suspense account.
Conclusion
This was all about how to create a suspense account in QB and when to use it. Hopefully, the blog helped you successfully set up your account and organize your books with its advent. However, if you face an issue or have a query, you may speak to a QuickBooks expert regarding the same. Dial +1(855)-738-0359 and connect with a QB expert now!
Frequently Asked Questions
A suspense account is an umbrella for various types of transactions that cannot be identified or are temporary until they are put into the respective accounts they belong in.
Depending on the types of transactions, one can classify suspense accounts further. It depends on the purpose of the account and the types of transactions you are going to use it for. For instance, you can break your suspense account into two sub-accounts such as the brokerage suspense account and the mortgage suspense account.
You can edit the account from the accounts charts where you created it. However, when clearing your suspense account, you will need to move the transaction to the account it should be in.
The payroll suspense account holds temporary transactions before they can be classified into the respective accounts where they belong to. Suspense accounts in general hold the unidentified or temporary journal entries to match the books.
Kate is a certified public accountant (CPA) with expertise in various accounting software. She is technically inclined and finds passion in helping businesses and self-employed people carry out bookkeeping, payroll, and taxation without worrying about errors. Every once in a while, Kate loves to travel to far-off places and relax in the lap of nature.