Suspense Account
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Accounting ProcessQuestion 5019 of 84
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Detailed Solution & Explanation
Suspense Account :
When trial balance does not tally, the difference is put to an account named as
Suspense A/ c. Difference is:
- debited (if debit side of trial balance is short) or
- credited (if credit side of trial balance is short) to Suspense A/ c
Thus with the help of suspense A/ c trial balance is artificially tallied.
While passing rectification entry for one sided errors, the one effect Dr. or Cr. will go
into the A/ c in which mistake is committed & the other effect will be given to Suspense
A/ c.
When all such one sided errors are rectified the Suspense A/ c will become Nil.
While rectifying double sided errors, suspense account will not get affected.
About This Chapter: Accounting Process
Paper
Paper 1: Accounting
Weightage
25-30%
Key Topics
Journal, Ledger, Trial Balance, Cash Book, Rectification
This chapter covers Journal, Ledger, Trial Balance, Cash Book, Rectification and is part of Paper 1: Accounting in the CA Foundation exam.
View Official ICAI SyllabusExam Strategy Tip
This topic carries 25-30% weightage. Focus on understanding core concepts rather than memorizing.
Key Concepts to Understand
Trial Balance
A statement listing all ledger account balances at a specific date to verify the arithmetic accuracy of the double-entry bookkeeping system. It serves as the first step in preparing final accounts.
Suspense Account
A temporary ledger account used to record transactions when there is uncertainty about the correct classification, or to make the Trial Balance agree when errors are suspected. It is closed once the errors are located and rectified.
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