What is a suspense account, when is it prepared?

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A suspense account is a general ledger account that is used for the temporary recording of transactions that cannot be identified during recording.

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Suspense Account

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What is a suspense account? Is it necessary that 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?

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When is suspense account opened?

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.

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.

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?

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What is a suspense account, when is it prepared?

A suspense account is a general ledger account that is used for the temporary recording of transactions that cannot be identified during recording. Also read: Suspense Account Learn about more questions and answers on business studies and various other commerce topics from our website.

A suspense account is a general ledger account that is used for the temporary recording of transactions that cannot be identified during recording.

Also read:

Suspense Account

Learn about more questions and answers on business studies and various other commerce topics from our website.