Suspense account in the books of an organization in which items are entered temporarily before allocation to the correct or final account.
The suspense account is used because the proper account could not be determined at the time that the transaction was recorded.
A suspense account is normally located in the general ledger. Any amount that is posted to the suspense account should be there on a temporary basis only, as this amount needs to be investigated and posted to the correct account.
Most accounting systems contain a suspense in their chart of accounts, but this is something that you should avoid using unless there are no other options.
Deferred Revenue is when a customer pays for services or goods in advance. They work has not been performed, but will be done a later date that is set by the business owner and customer.
Since the company has received payment, but has not done the work. The cash received is a liability on the balance sheet under deferred revenue.
The cash in deferred revenue is recorded as a sale only after the work has been done. The amount would be deducted from deferred revenue on the balance sheet and recorded as a sale in the profit and lost statement for the month that the work was done.
This helps keep sales accurate for company that received payments earlier than expected.
An issue with deferred revenue can be that you spend the money before doing the work. If the customer decided to cancel the service or good. The money would need to be paid back and if the money is already spent. This can cause cash flow issue in the business operation.
Two factors can go wrong that makes manager and companies do unethical practices.
1. Failure of Individual Character:
An ethical manager and accountant is honest and fair. However, mangers and accountants often face pressures from supervisors to meet company and investor expectations. In many cases, manager and accountant justify small ethical violations to avoid such pressure. These small ethical violations can build up to big violations as the company financial problem start to emerge.
2. Culture of Greed and Ethical Indifference:
By their behavior ad attitude, senior mangers set the company culture. Senior mangers create the culture that is influence through out the organization. If the senior manager is corrupt by greed and indifference. There influence will set the tone of behavior with there coworkers in the workplace.
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