A parking spot, not a destination
Sometimes a transaction arrives before its explanation does. A deposit appears in the bank with no matching invoice, or a payment leaves with no receipt. Rather than guess, a bookkeeper may record it in a suspense account. The cash side is recorded correctly, and the other side waits until the facts are known.
That is a legitimate use. The problem starts when the account becomes a permanent home for things nobody has time to look into. A balance that sits there for months means some part of your income, expenses or loans is not reported where it belongs.
An illustrative example
Suppose $1,500 arrives in the business bank account and nobody recognizes it. It is recorded in suspense. A week later the deposit turns out to be a customer paying an invoice from last quarter. The entry is moved out of suspense and applied against accounts receivable, which also closes that invoice. Had it been left alone, sales would not have changed but the customer would still look overdue.
If instead it had been the owner repaying money lent to the business, the clearing entry would go to a shareholder loan account. The same $1,500 would be classified quite differently, which is why guessing is risky. The numbers here are round and ignore sales tax.
Why it matters at year end
A suspense balance on the trial balance usually means the books are not finished. Unclassified items can hide unreported revenue, missed expenses, or GST/HST that was collected or paid but never tracked. They can also affect how an item is treated in the corporation’s tax return.
The Canada Revenue Agency expects your records to support the income and expenses you report, and income records should show the date, amount and source. A transaction that cannot be explained is hard to support if it is ever questioned.
What to discuss with your accountant
Ask your bookkeeper to list every item in suspense with its date, amount and what is needed to clear it. Agree that the balance should be zero at each month end, or that each remaining item has a named owner and a date.
Bring bank statements, supplier correspondence and any contracts that might explain the entries. If many items are unexplained, ask whether a broader clean-up is warranted before the year-end review.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Business recordsCanada Revenue Agency
- GST/HST and payroll recordsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.