Create, Set Up & Use Suspense Account in QuickBooks

A suspense account in QuickBooks Online (QBO) serves as a temporary holding area for transactions that cannot be immediately classified or need further review before being assigned to a specific category. This helps keep records accurate until each transaction is reviewed and assigned to the correct account. Once the correct category is confirmed, you can reclassify the transaction.

Unsure how to set up a suspense account in QuickBooks Online? Use the steps below to create and set it up quickly and accurately. This guide explains the full process clearly.

What is a Suspense Account in QuickBooks?

A suspense account in business accounting temporarily records transactions that do not yet have a clear category. For example, if a customer makes a partial mortgage payment, the amount goes into the suspense account until the full payment is received or the correct allocation is identified.

Unclassified or uncategorized entries in accounting software are transactions that have not been sorted into the correct account. A suspense account can also hold entries with discrepancies that need review or more details before being resolved.

What is the Suspense Account List in QuickBooks?

QuickBooks does not include a suspense account by default. You can manually create one to record temporary or unidentified transactions.

How to Find Suspense Account in QuickBooks?

The suspense account appears in the general ledger or the chart of accounts. Its classification as an asset or liability depends on the transaction. For example, choosing “Expenses” as the account type will classify the suspense account as a liability.

How to Create a Suspense Account in QuickBooks?

QuickBooks Online (QBO) automatically creates two default accounts when you set up VAT or other sales tax: a Payable account and a Suspense account. You can also create a suspense account manually through the Chart of Accounts if needed.

How to Set Up a QuickBooks Suspense Account?

To create a suspense account in QuickBooks Online (QBO), follow these steps through the Chart of Accounts:

• Open the Chart of Accounts.
• Click Account at the bottom of the list.
• Click the New button.
• Set the Account Type to Expense.
• Click Continue.
• Enter Suspense Account or another name in the Account Name field.
• Add an Account Number (optional, but useful for tracking).
• Click Save and Close.

This creates a suspense account to temporarily hold uncategorized or unidentifiable transactions in your QuickBooks Online file.

How and When to Use the QuickBooks Suspense Account?

QuickBooks Online (QBO) may create a default suspense account when setting up VAT or sales tax. You can also create one manually in the Chart of Accounts by selecting “Expense” or another suitable account type.

To make a suspense account journal entry:

Step 1: Identify the Need

• Use a suspense account when you cannot classify a transaction or lack details, such as an unidentified payment, partial payment, or unreceived asset.

Step 2: Create a Suspense Account (if it doesn’t exist)

• Go to the Chart of Accounts in QuickBooks.
• Click New.
• Set Account Type to Expenses or another suitable type based on your case.
• Name the account (e.g., Suspense Account).
• Add an account number (optional).
• Click Save and Close.

Step 3: Record a Journal Entry

• Go to + New > Journal Entry.
• Enter the amount in the Suspense Account as a debit or credit, depending on the case.
• Enter the opposite amount in the related temporary account.

Step 4: Investigate and Resolve

• Gather the missing details or clarifications about the transaction.

Step 5: Reclassify and Close

• Reverse the suspense entry.
• Record the transaction in the correct permanent account.
• This clears the suspense account balance.

To Use the Suspense Account

A suspense account in QuickBooks is used to temporarily hold transactions that are incomplete, unclassified, or uncertain. It serves as a placeholder until you gather enough information to post the transaction to its correct permanent account.

You should use a suspense account in situations where:

• You are unsure how to categorize a transaction.
• You receive a partial payment and want to record it as one entry when fully paid.
• You bought a fixed asset on installments but have not yet received it.
• You need to resolve mismatched balances or discrepancies.
• You cannot verify the sender of a payment.

How Can You Clear the Suspense Account in QuickBooks?

To clear a suspense account in QuickBooks, you need to ensure the original transaction is properly categorized and that the correct account exists in your records. This process helps move the entry from the temporary suspense account to its rightful place.

Follow these steps to locate and clear the suspense account:

• Go to the Inquiry menu.
• Select the Account option.
• Click on the Current tab.
• Press the OK button.
• Choose Conditions.
• Open the Field tab.
• Select Account.
• In the Operator section, choose Equal to.
• Enter the Suspense account number in the Value field.
• Click OK to apply the filter.
• After locating the transactions, investigate and reclassify them to the appropriate accounts. Once all entries have been moved, the suspense account balance should be zero.

Tip: Double-check the suspense account number to avoid filtering incorrect transactions.

This process keeps your records accurate and ensures the suspense account stays temporary, not permanent.

Conclusion

A suspense account in QuickBooks holds transactions temporarily when their classification is unclear or incomplete. Using this account helps maintain accurate financial records by preventing misclassification. Always review and reclassify entries from the suspense account to their correct accounts promptly. This keeps your books organized and ensures reliable reporting.

Frequently Asked Questions