A-AS Level (CIE) Accounting Paper-1: Specimen Questions with Answers 48 - 48 of 93

Question 48

Question

MCQ▾

Suspense account in the trial balance will be entered

Choices

Choice (4)

a.

Trading a/c

b.

Manufacturing a/c

c.

Profit and loss a/c

d.

Balance sheet

Answer

d.

Explanation

Suspense Account is an imaginary account used as temporary measure only for the purpose of reconciling a Trial balance. Later as and when the errors affecting the suspense account-are located, rectification entries are passed with the help of suspense account. Thus, when all the errors are located and rectified, the suspense account will automatically stand closed i.e.. , it will not show any balance. But if suspense account still shows a balance, it will indicate that certain errors are still to be discovered and rectified. In such cases, if the suspense account shows a debit balance, it is taken to the balance sheet on the assets side and on the contrary, if it shows a credit balance it is taken to the balance sheet on the liabilities side. Following points should be noted while passing rectification entries with the help of suspense account:

  • Suspense account is used to rectify only those errors which affect the Trial balance.
  • If the account which is to be rectified is debited in the rectifying entry, suspense account will be credited to complete the double entry.
  • If the account which is to be rectified is credited in the rectifying suspense account will be debited to complete the double entry.

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