What is disbursement suspense?
Royalty Disbursement or Suspense Account means a deposit account holding exclusively (a) funds owned by the owners (other than any Loan Party) of royalty interests in the Oil and Gas Properties of any Loan Party or (b) funds that are required by applicable Legal Requirements to be held in a suspense account because …
What’s a suspense balance?
It is a catch-all account used to temporarily hold your mortgage-related funds until your mortgage lender or servicing firm decides how to apply or allocate those funds, such as making your property tax and homeowners insurance payments. The suspense balance refers to the amounts held in a suspense account.
What is suspense account?
A suspense account is a temporary resting place for an entry that will end up somewhere else once its final destination is determined. There are two reasons why a suspense account could be opened: A bookkeeper is unsure where to post an item and enters it to a suspense account pending instructions.
What does held in suspense mean?
If you keep or leave someone in suspense, you deliberately delay telling them something that they are very eager to know about.
When a suspense account is opened?
A suspense account is opened whenever you receive a payment and you cannot identify which invoice the customer wants paid or which customer made the payment. If your customer sent in a partial payment, contact the customer to find out which items or invoices the payment covers.
How do you clear a suspense account?
In accounting for small business, most suspense accounts are cleared out on a regular basis. To be cleared out, the account must have a zero balance. Move suspense account entries into their designated accounts to make the suspense balance zero.
Why suspense account is opened?
What type of account is a 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.
How is the balance of suspense account treated?
In case a suspense a/c is not closed at the end of an accounting period, the balance in suspense account is shown on the asset side of a balance sheet if it is a “Debit balance”. In case of a “Credit balance”, it is shown on the liability side of a balance sheet.
Why is suspense account important?
Suspense accounts allow transactions to be posted before there is sufficient information available to create an entry to the correct account or accounts. Without posting such transactions, there may be transactions that are not recorded by the end of a reporting period, resulting in inaccurate financial results.
What causes a suspense account?
Suspense accounts are used when your trial balance is out of balance or when you have an unidentified transaction. The suspense account is a general ledger account that acts as a holding account until the error is discovered or the unknown transaction is identified.
How do you balance a suspense account?
To account for the payment, open a Suspense Account and credit the account with the full $500. To balance the transaction, make a debit to Cash for $500. When you find out which customer made the payment, debit the Suspense Account for $500 and credit your Account Receivable customers account for $500.