Usage of Suspense Account

Q.

Is loan a debit or credit in trial balance?

Q. Give the Journal entries to rectify the following errors:
(i) Purchases Book was overcast by ₹ 1, 000.
(ii) Installation charges on new machinery purchased ₹ 500 were debited to Sundry Expenses Account as ₹ 50.
(iii) Radhey Shyam returned goods worth ₹ 500 which was entered in the Purchases Return Book.
(iv) Goods taken by the proprietor for ₹ 5, 000 have not been entered in the books at all.

Q. A Trial Balance disclosed a difference of ₹ 417 placed on the credit side of the Suspense Account. Later on the following errors were located:
(i) Goods worth ₹ 200 purchased from Sohan had been posted to his account as ₹ 250.
(ii) A purchase of furniture for ₹ 500 was recorded in the Purchases Book.
(iii) Instead of crediting Gian’s Account with ₹ 512, it was debited with ₹ 215.
(iv) Goods worth ₹ 130 returned by Gian were entered in the Sales Book and posted therefrom to the credit of Gian’s Personal Account.
Pass the rectifying entries and prepare a Suspense Account.

Q. Rectify the following errors:
(i) The total of one page of Sales Book was carried forward as ₹ 371 instead of ₹ 317.
(ii) ₹ 540 received from Yatin was posted to the debit of his Account.
(iii) Purchases Returns Book was overcast by ₹ 300.
(iv) An item of ₹ 1, 062 entered in Sales Return Book had been posted to the debit of customer who returned the goods.
(v) ₹ 1, 500 paid for furniture purchased had been charged to ordinary Purchase Account.

Q. Prepare Bank Reconciliation Statement from the following information:
Cash at bank as shown by the Cash Book ₹ 75, 000. Cheques drawn but not yet presented:

S. Sahai	₹ 2, 000
Man Mohan	₹ 3, 000

Cheques paid into the bank but not yet credited, ₹ 1, 900. Bank charges not yet entered in the Cash Book, ₹ 100.

Q.

If the total of the debit column in the trial balance is more than the credit column, the difference is placed to the_____ of suspense account so that the trial balance may tally.

1. Debit

2. Credit

3. Debit or Credit

4. None of the above

Q. There was a difference of ₹ 720 in the Trial Balance which has been transferred to the credit side of the Suspense Account. Pass the rectifying entries and prepare a Suspense Account to rectify the following errors:
(i) An amount of ₹ 375 now posted on the debit side of the Commission Account instead of ₹ 275.
(ii) Credit amount of ₹ 260 posted to the debit of the Personal Account as ₹ 360.
(iii) Goods sold to Surinder recorded in Purchases Book ₹ 300.
(iv) D’s bill for erection of godown at a cost of ₹ 1, 200 has been charged to the Repairs Account.

Q. Cheque deposited dishonoured will increase the balance as per Pass Book.

1. True
2. False

Q. Rectify the following errors by passing Journal entries:
(i) A sum of ₹ 470 received from Ganga was posted to her debit as ₹ 740.
(ii) A debit balance of ₹ 550 in the personal account of Mr. John was undercast.
(iii) Bills Receivable from Brown for ₹ 3, 000 posted to the credit of Bills Payable Account and credited to Brown’s Account.
(iv) Goods returned by Mridul ₹ 225 have been entered in the Returns Outward Book.

Q. There was a difference in the Trial Balance of M/s. Jain & Sons, prepared for the year ended 31st March, 2009. The accountant put the difference in Suspense Account.
The following errors were found:
(i) Purchases Return Book total ₹ 400 has not been posted to Ledger Account.
(ii) ₹ 5, 100 spent on legal expense for the newly acquired Building was debited to the Building Account as ₹ 1, 500.
(iii) A sale of ₹ 6, 540 to Rajat has been credited to his account.
Rectify the errors and show the Suspense Account with Nil closing balance.

Q. You are presented with a Trial Balance showing a difference which has been carried to the Suspense Account and the following errors are revealed:
(i) ₹ 1, 700 paid in cash for an office equipment was charged to Office Expenses Account.
(ii) A cash sale of ₹ 5, 000 to Black, correctly entered in the Cash Book, was posted to the credit of Black’s Account in the Ledger.
(iii) Goods amounting to ₹ 800, returned by Blue, were entered in the Sales Book and posted therefrom to the credit of Blue’s Account.
(iv) Furniture purchased for ₹ 8, 100 was posted to Furniture Account as ₹ 810.
(v) Goods amounting to ₹ 10, 000 sold to Red were correctly entered in Sales Book but posted to Red’s Account for ₹ 18, 000.
(vi) Sales Return Book was overcast by ₹ 100.
You are required to pass the necessary rectification entries in respect of the above.

Q.

Which of the following errors shall be rectified by using a Suspense Account?

1. Purchase of Plant and Equipment incorrectly debited to Purchases Account Rs 20, 000.

2. Outstanding telephone bill of Rs 510 was not recorded in the books.

3. A cash sale of Rs 7600 has been recorded as Rs 6700 in the sales account although correctly entered in cash book.

4. Rent of one month of Rs. 2, 500 was recorded in the books as rent of the residential house of the proprietor.

Q.

The total of sales book was carried forward from page 5 to 6 as Rs.1222 instead of Rs.1122. Suspense account shall ___ with Rs ___ to rectify this.

1. Debited by Rs 100

2. Credited by Rs 100

3. Credited by Rs 1122

4. Debited by Rs 1222

Q.

When total of debit column is higher than the credit column, The trial balance is temporarily balance by showing suspense account in _____ Column

1. Debit

2. Credit

3. Either A or B

4. None of the above

Q.

Rectification of an error of overcasting in the Purchase returns book will require purchase return account to be ___ & suspense account to be ___

1. Debited & credited respectively

2. Credited & Debited respectively

3. Either A or B

4. None of the above

Q.

Rs. 580 received from Shyam were posted to his account as Rs. 850. To rectify this error, suspense account shall be ___ With Rs ___ .

1. Debited with Rs 270

2. Credited with Rs 270

3. Credited with Rs 580

4. Debited with Rs 580

Q.

A bookkeeper discovers that an amount paid to a supplier has been wrongly entered in another supplier’s account. Which book of original entry will the bookkeeper use when correcting this error?

1. Cash Book

2. Purchase Journal

3. Purchase Return Journal

4. Sales return Journal

Q.

An amount of Rs. 99 was omitted to be posted to the credit of a customer's account from the Cash Book. Suspense account shall be ___ to rectify this error.

1. Debited with Rs 99

2. Credited with Rs 99

3. None of the above

4. Suspense account shall not be effected

Q.

Raju purchases 10 pens for Rs 150 and Manish buys 7 pens for Rs 84. Can you say who got the pens cheaper?

Q. Prepare Bank Reconciliation Statement from the following particulars on 31st July, 2017:
(i) Balance as per the Pass Book ₹ 50, 000.
(ii) Three cheques for ₹ 6, 000, ₹ 3, 937 and ₹ 1, 525 issued in last week of July, 2017 were presented for payment to the bank in August, 2017.
(iii) Two cheques of ₹ 500 and ₹ 650 sent to the bank for collection were not entered in the Pass Book by 31st July, 2017.
(iv) The bank charged ₹ 460 for its commission and allowed interest of ₹ 100 which were not mentioned in the Bank Column of the Cash Book.

Q.

How do you distinguish between information gathering and insight formation?

Q.

After the corrections have been made, a revised Trial Balance is prepared which should normally tally. But, if it does not tally, it means there are still some errors which have not been detected. In such situation the usual practice is to place the difference to ___ Account and tally the Trial Balance for the time being.

1. Capital Account

2. Asset Account

3. Suspense Account

4. Liability Account

Q.

Give one word/term on phrase for each of the following statements.

1) Errors of incorrect entries or wrong posting.
2) Account to which difference in trial balance is transferred.
3) Errors which are committed by clerks.
4) Transaction remained to be recorded at all in the books of accounts.
5) Error in which the effect of one mistake is nullified by another mistake.
6) An entry passed to cancel wrong effects given and give correct effects to accounts affected.
7) Errors of calculation.
8) Error which affects the agreement of trial balance.
9) Error which are not disclosed by the trial balance.
10) Taking the Total more while closing books of accounts

Q. When all the errors have been completely rectified, the suspense account will show a balance.

1. debit
2. credit
3. nil

Q.

How do you find the error of omission?

Q.

Goods sold to Vijaya for Rs.45 was posted to her account as Rs.54. Suspense account shall be ___ By Rs ___

1. Debited by Rs 9

2. Credited by Rs9

3. Debited by Rs 45

4. Credited by Rs 54

Q.

From the following Subsidiary Book Prepare necessary ledger accounts and balance them.

Purchases Book
Date	Particulars	Inward Invoice No.	L.F.	Amount Rs
2011 Aug. 2	Laxman			4, 250
5	Joseph			1, 500
10	Salman			3, 000
15	Kamini			2, 500
31	Patel			800
	Total			12, 050

Purchase Return Book
Date	Particulars	Debit Note No.	L.F.	Amount Rs
2011 Aug.7	Laxman			550
18	Kamini			700
31	Patel			100
	Total			1, 350

Q.

When all the errors have been completely rectified the suspense Account will show ___ balance.

1. Nil

2. None of the above

3. Debit

4. Credit

Q.

Which of the following errors shall NOT be rectified by using a Suspense Account?

1. Returns Outwards Books was cast Rs 10 short

2. Rs 600 paid for purchase of Office Furniture was posted to the Purchase Account.

3. A credit sale of Rs 76 was wrongly posted to the Sales Account as Rs 67.

4. Payment of a Rs100 telephone bill correctly entered in the Cash Account but debited to the Telephone Account as Rs1, 000.

Q. Select the most appropriate alternatives from those given below and rewrite the sentence.

If the trial balance shows a short credit the suspense account will have a ________
a) debit
b) zero
c) credit
d) nil