What do you mean by suspense account, Financial Accounting

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Q. What do you mean by suspense account? How are errors in accounting classified?

Suspense account: A suspense account is an account, which is opened when the trail balance does not tally, and in which the difference in the trail balance is entered to tally the trail balance. It is an account that is used to store short term funds until a present decision is made about their allocation. A suspense account is a temporary resting place for an entry that will end up somewhere else once its final destination is determined. 

Classification of Errors:

1. Error of omission 

2. Error of commission 

3. Error of principle

4. Compensating errors

5. Errors of duplication


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