Here is a detailed markdown summary for Use of suspense accounts.md based on IACEW learning and [[ACCA Book-keeping/IACEW PDF.pdf]]:

Use of Suspense Accounts

Overview

A suspense account is a temporary holding account used when there is uncertainty or imbalance in accounting entries, typically when debits and credits do not match. It allows transactions to be recorded while investigations or corrections are made.

Purpose

• To temporarily hold unidentified or unmatched transactions.
• To maintain the integrity of the double-entry system by balancing the trial balance.
• To facilitate error investigation and correction without delaying accounting processes.

Common Situations for Use

• When a transaction amount is unknown or unclear.
• When an error causes imbalance in the trial balance.
• When a payment or receipt cannot be matched to a specific account.

Accounting Treatment

• Record the uncertain amount in the suspense account to balance debits and credits.
• Investigate and identify the correct account(s) for the transaction.
• Make correcting journal entries to transfer amounts from the suspense account to the correct accounts.
• Clear the suspense account to zero before finalizing accounts.

Example

A payment of £500 is received but the customer is unknown.
Entry:
Dr Cash £500
Cr Suspense £500

Once the customer is identified, transfer the amount:
Dr Suspense £500
Cr Trade Receivables £500

Impact on Financial Statements

• Suspense accounts should not appear in final financial statements.
• Unresolved suspense balances indicate incomplete or inaccurate accounting records.

References

• IACEW learning Chapter 12: Errors and suspense accounts
• [[ACCA Book-keeping/IACEW PDF.pdf]] Section on Suspense Accounts and Error Correction

You can save this as Use of suspense accounts.md in your vault.
Let me know if you want detailed notes or examples for other topics!