Please help me understand about suspense account.

Which side of the account to enter is it debit and credit?

Why debit side and why credit side?

Many thanks for your kind assistance

Benda

The Balancing Account is automatically updated so that Assets equal Liabilities plus Equity (an accounting rule). You should aim to have a zero balance in this account.

For example, if the opening balance for your Cheque Account is £500 (debit) and your Bank Loan opening balance is £200 (credit) the Balancing Account will automatically be set to £300 (credit). We therefore need to ask, "Where did this extra £300 come from?". If it was introduced into the business by the owners, we would set the opening balance of the "Owner's Capital" account to £300 (credit). Doing this would automatically change the opening balance of the Balancing Account to zero, meaning our accounts balance.

I hope this makes sense - please let me know if you need more information.

Regards,

Where is this owners equity account?I can not see it in the equity account headings

Hi Andrew,

The Owners Equity account is not included if the business is a Limited Company. You will need to ask your accountant to provide the correct opening balance for each account such that total assets equals total liabilities plus total equity - this will result in a zero Balancing Account figure.

Regards,