Which of the following is incorrect with regards to suspense account in rectification of errors?

Suspense account is not the result of any transaction

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It merely represents the net effect of errors which still remain undetected

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During the next accounting year, after the errors are located and rectified, the Suspense Account will get closed

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Suspense Account created is not shown in the Balance Sheet

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Solution

The correct option is D
Suspense Account created is not shown in the Balance Sheet

Suspense Account created is shown in the Balance Sheet and is carried forward to the next year.

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Similar questions

What is a suspense account? Is it necessary that a suspense account will balance off after rectification of the errors detected by the accountant? If not, then what happens to the balance still remaining in suspense account?

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.

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

For rectification of which of the following errors, suspense account is used?

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.

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Which of the following is incorrect with regards to suspense account in rectification of errors?

The correct option is D Suspense Account created is not shown in the Balance Sheet Suspense Account created is shown in the Balance Sheet and is carried forward to the next year.

The correct option is D
Suspense Account created is not shown in the Balance Sheet

Suspense Account created is shown in the Balance Sheet and is carried forward to the next year.