The main object of opening suspense account is ___________.

To tally the trial balace

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To avoid the delay in the preparation of financial statements

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To rectify the errors

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None of these

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Solution

The correct option is B To avoid the delay in the preparation of financial statements
Suspense accounts are the accounts that are prepared when the trial balance does not tally or when there is an unidentified transaction. These are prepared temporarily to avoid delay in preparation of financial statements and are closed when the reasons are deducted or at the end of accounting cycle.

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Similar questions

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. Rectify the following errors assuming:-
That no suspense account has been opened with difference in the trial balance.

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. 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. During the course of an accounting year, the accountant prepared a trial balance which did not tally. He put the difference in a suspense account. Subsequently, he located the following errors in his books of account:
(i) The total of the returns outwards book, ₹ 21,500 has not been posted.
(ii) A sale of ₹ 4,300 to Ramesh has been credited to him as ₹ 3,400.
(iii) A sale of ₹ 2,960 to Shyam has been recorded in sales book as ₹ 2,690.
(iv) Old furniture sold for cash worth ₹ 5,400 has been posted in sales account as ₹ 4,500. There was no profit or loss on sale.
(v) Goods taken by proprietor worth ₹ 1,000 have not been recorded in the books of account at all.
Pass journal entries of rectify the above mentioned errors and prepare suspense account assuming no error has remained undetected.

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