Anyone who works in accounting will soon come across an item where it is not clear to which general ledger account it should be posted. When this happens, you can use a general ledger (GL) account called Miscellaneous Suspense. This account is normally located in the Other Assets section of the Balance Sheet. It serves as a temporary holding place until adequate research can be done to determine the nature of the amount. Once that determination is made, you simply reclassify the amount to the appropriate GL account.
See my new article titled Miscellaneous Suspense – The Handy-Dandy GL Account, in the articles section of the blog for a more detailed description of how the account can be used.
In the Post section of the blog under Debits & Credits, I’ve had a running commentary with a fellow named Mark. His case is a perfect example of how the Miscellaneous Suspense account can be of use. He is accumulating costs related to his new business that will officially start in a couple of weeks. He has been working on it for almost one year. Instead of recording a number of small amounts into GL accounts for fixed assets or start-up costs, I have recommended that he accumulate these costs into the Suspense account. Once he and his accountant have determined the nature of the costs, he can reclassify and group like costs so that the entry into the final account will be one or two entries instead of a series of small entries.
I use the Miscellaneous Suspense account all the time. Sometimes a client forgets to code a check to a GL account. Instead of stopping what I’m doing, I put it in the Suspense account. I may have a dozen entries by the time I’m done. I make sure I have written a good description for each item, then I simply print out the Suspense account ledger page and call or fax the sheet to the client. The client provides the answers, and I write the journal entries to reclassify the amounts.
Sometimes a figure will sit in the Suspense account until the end of the year. I must clear the account one way or the other at year end, unless I specifically know that it must wait until the following year. At year end, when I print the Suspense account page, I may have quite of few entries of debits and credits. I go through the list and cross out the debits and credits entries I have already dealt with. This leaves the ones I still need to resolve. Some items may require more detective work. Hopefully, I’ve kept good notes in the past records. What may have seemed so clear to you four months ago, can grow cold awfully fast.
John Day
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