Gujarat BoardEnglish MediumSTD 11 CommerceAccountP2 C1 Rectification ofErrors2 Marks
Question
Write note on suspense accounts.
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Answer
Suspense A/c: When the trial balance does not tally but there is an urgency for preparing final accounts, temporarily the difference in the trial balance is transferred to one account in order to get it tallied and that account is known as a suspense account.If the difference arises on the debit side of a trial balance, it is treated as a debitbalance of suspense account and in final account it will be shown on the assets side of the balance sheet.
If the difference arises on the credit side of a trial balance, it is treated as a creditbalance of suspense account and in final Alc. it will be shown on the capital liabilities side of the balance sheet.
Balance sheet is tallied by transferring the difference of trial balance to suspense A/c. In the begining or during the next year the errors because of which the trial balance was not tallied rectification entries will be passed with the help of suspense account. As the total of sales book is under cost by $Rs.1,500$ then by mistake sales account would be omitted to by credit then Suspense A/c will be debited $Rs.1,500$ & Sales A/c. $Rs.1,500$ will be credited. When all the errors are rectified, suspense account is closed automatically and will not have any balance. If there is any balance in suspense account, it means so many error to by rectified or during the rectification of errors new error will be arise. Other than rectification of errors, suspense Alc. is also useful for various other purposes.
$(1)$ When in any transaction the account which is to be debited or credited is not decided for the time being that amount is debited or credited to suspense account. Later on when the correct head of account is decided, after giving the effect to that account, the suspense account is closed.
$(2)$ When in any transaction, if the name of the party is to be kept secret, that amount is recorded to suspense account
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