Question
What is a suspense account? When is it opened?
✓
Answer
Suspense Account: Sometimes, in spite of best efforts of an accountant, all the errors are not located and the Trial Balance does not tally. In such a situation, to avoid the delay in the preparation of final accounts, the difference in the Trial Balance is placed to a newly opened account known as “Suspense Account”' and the Trial Balance tallies. If the debit side of the Trial Balance exceeds the credit side, the difference will be put on the credit side of the suspense account and if the credit side of the Trial Balance exceeds the debit side, suspense account will be debited. After including the balance of suspense account in the Trial Balance, it will appear to be tallied.
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.
Explore more
Similar questions
Give any four points of distinction between Provisions and Reserves.
Fill up the missing information in the plant Account given below. Depreciation is charged at 10% p.a. on written down value method.
On 15th January 2018, X sold goods to Y for ₹ 50,000 charging IGST @ 12%. Yimmediately paid ₹ 6,000 in cash and accepted two bills of equal amount, the first for one month and the second for two months. The first bill was met on due date but on the due date of the second bill, Y requested that the bill be renewed for a further period of two months. X agreed provided that interest at 15% p.a. was paid immediately in cash. Yagreed to this. The second bill was met on the due date.
Give journal entries in the books of X and Y.
Give journal entries in the books of X and Y.
On 1st April, 2015, a Company bought Plant and Machinery costing ₹ 68,000. It is estimated that its working life is 10 years, at the end of which it will fetch ₹ 8,000. Additions are made on 1st April, 2016 to the value of ₹ 40,000 (Residual value ₹ 4,000). More additions are made on Oct. 1, 2017 to the value of ₹ 9,800 (Break up value ₹ 800). The working life of both the additional Plant and machinery is 20 years.
Show the Plant and Machinery account for the first four years, if depreciation is written off according to Straight Line Method. The accounts are closed on 31st March every year.
Show the Plant and Machinery account for the first four years, if depreciation is written off according to Straight Line Method. The accounts are closed on 31st March every year.
Following information has been given by Rajendra. Prepare a Bank Reconciliation Statement as on 31st Dec. 2016, showing balance as per cash book:
- Debit balance shown by the pass book ₹ 17,800.
- Cheques of ₹ 21,600 were issued in the last week of December, but of these ₹14,800 only were presented for payment.
- Cheques of ₹ 10,750 were deposited in bank, out of them a cheque of ₹ 4,200 was credited in the first week of January, 2017.
- A cheque of ₹ 1,200 was debited in the cash book but was not deposited in bank.
- Insurance premium paid by bank ₹ 1,450.
- A bill of exchange for ₹ 6,200 which was discounted with bank, returned dishonoured but no entry was made in the cash book.
- Bank charges and interest charged by bank are ₹ 350.
Show the accounting equation on the basis of the following transactions and also show the Balance Sheet:
→- Started business with Cash ₹ 60,000 and Goods ₹ 30,000.
- Purchased goods for Cash ₹ 40,000 and on Credit ₹ 25,000.
- Goods costing ₹ 48,000 sold at a profit of $33\frac{1}{3}\%.$ Three-fourth payment received in Cash.
- Goods costing ₹ 20,000 sold at a loss of 5%, out of which ₹ 12,000 received in Cash.
- Paid Rent ₹ 4,000 and Salary ₹ 6,000.
- Received Cash from Debtors ₹ 15,000.
- Paid telephone bill amounting to ₹ 800.
Chandra Ltd. purchased a second-hand machine for ₹ 8,000 plus CGST and SGST @6% each on 1st July, 2015. They spent ₹ 3,500 on its overhaul and installation. Depreciation is written off 10% p.a. on the original cost. On 30th September, 2018, the machine was found to be unsuitable and sold for ₹ 6,500. Prepare the Machinery A/c for four years assuming that accounts are closed on 31st March.
Rectify the following errors:-
- A sale of goods to Raja Ram for ₹ 2,500 was passed through the Purchases Book.
- Salary of ₹ 800 paid to Hari Babu was wrongly debited to his personal account.
- Furniture purchased on credit from Mohan Singh for ₹ 1,000 was entered in the Purchases Book.
- ₹ 5,000 spent on the extension of buildings was debited to Buildings Repairs Account.
- Goods returned by Mani Ram ₹ 1,200 were entered in the Returns Outwards Book.
Prepare Two Column Cash Book from the following transactions and balance the book on 31st Jan., 2014:
| 2014 | |
| Jan. 1 | Cash in hand ₹ 50,000; Bank overdraft ₹ 1,90,000. |
| Jan. 2 | Purchased goods from Rajesh Kumar of the list price of ₹ 50,000 at 5% trade discount and payment made by cheque. |
| Jan. 6 | Goods sold for ₹ 80,000 and payment received by cheque. Cheque deposited into Bank on same day. |
| Jan. 10 | Goods purchased for cash ₹ 19,800. |
| Jan. 15 | Furniture sold for ₹ 1,77,000 and payment received by cheque & cheque deposited into Bank on same day. |
| Jan. 18 | Salaries paid ₹ 4,500. |
| Jan. 21 | Settled the amount due to Ram ₹ 2,000 by paying cash ₹ 1,910. |
| Jan. 22 | Cash received from Jai ₹ 14,780 in full settlement of his account of ₹ 15,000. |
| Jan. 23 | Paid Life Insurance premium ₹ 1,500. |
| Jan. 31 | Deposited with bank the entire balance after retaining ₹ 7,000 cash in hand. |
Enter the following transactions in the Cash Book with Cash and Bank Columns:
|
2016
|
|
(₹)
|
|
June 1
|
Cash in hand
|
800
|
|
Bank Overdraft
|
5,700
|
|
|
June 7
|
Received a cheque from Bharti
|
3,250
|
|
June 9
|
Deposited the above cheque into bank
|
|
|
June 12
|
Paid to Bhavana by cheque
|
2,425
|
|
June 15
|
Bharti's cheque returned dishonoured
|
|
|
June 20
|
Withdrew from Bank for office use
|
250
|
|
June 25
|
Cheque received from Panna Lal and endorsed it in favour of Kamal on 28th June
|
1,200
|
|
June 30
|
Income Tax paid by cheque
|
150
|
|
June 30
|
Bank charges
|
25
|