Suspense Account is used to rectify those errors which have been located ______________.

Before preparation of trial balance

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After preparation of trial balance

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Before or after preparation of trial balance

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After preparation of final accounts

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Solution

The correct option is B After preparation of trial balance
There are certain transactions which requires more clarifications. Till the final clarification, all such items are parked in a temporary account i.e. suspense account.
Once the errors are located, rectification entries are passed through suspense account to make the suspense account zero.
All such errors are errors after preparation of trial balance and hence are rectified by using suspense account.

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Similar questions

Q. A Trial balance is helpful for preparation of final account.

State true or false:

1) A Trial balance is an account.
2) A Trial balance is helpful for preparation of final accounts.
3) A Trial balance is most important document.
4) A Trial balance may be prepared on any date.
5) In Trial balance opening stock is recorded in credit balance column.
6) Both sides total of an account are taken in Gross Trial Balance.
7) Purchase account always shows debit balance.
8) A Trial balance is a List of Ledger balances.
9) A Trial balance does not ensure accounting accuracy.
10) A Trial balance shows only arithmetical accuracy.

State whether the following statements are True or False-

1) A trial balance can agree in spite of certain errors.
2) Errors committed due to lack of accounting knowledge are errors of omission.
3) Trial balance is prepared from the balance of ledger accounts.
4) Rectification entries are passed in cash book.
5) Single sided errors affect only one account.
6) Suspense account is automatically closed after rectification of all errors.
7) Errors affecting the agreement of trial balance are called on side errors.
8) There is no need to open a suspense account if the trial balance agrees.
9) All the errors can be rectified only through suspense account.
10) Compensating errors affect the agreement of trial balance.

Q. The preparation of a trial balance is for locating -

Q. Preparation of a trial balance helps in locating __________.

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