Suspense accounts explained

This video provides a short introduction to suspense accounts, both for the use of suspense accounts in journal entries, as well as for the use of suspense accounts in trial balance preparation and error correction. Suspense accounts are used during the posting of journal entries as a temporary solution for the trade-off between timeliness and accuracy. The timeliness principle in accounting refers to the need for accounting information to be presented to the users in time to fulfill their decision making needs. Whereas timely presentation of accounting information is highly desirable, it may conflict with the objective to present reliable information. This is because producing reliable and accurate information may take more time. Suspense accounts are used in trial balance preparation to address the need for consistency between general ledger and subledgers. Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!