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ACCA F3 Suspense Accounts (part b)
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Hello Sir,
what if the question said “Sale of an Old Motor Lorry at its book vale $510 had been entered in the sales account”
How do it treat this?
You should ask this sort of question in the Ask the Tutor Forum, and not as a comment on a lecture.
You would remove the 510 from sales by debiting the sales account.
Usually you would then credit a vehicle disposal account and deal with the sale in the normal way. However since it was sold at its book value (and so not profit or loss on sale) you would just credit the vehicles account to remove it.
It would not affect the suspense account at all because the debit will have equalled the credit (even though it was credited to the wrong account).
Hello John
Great lecture. Just a quick question, if £1,000 rent paid has been debited to the rent receivable account accidentally. To correct this error what entries would need to be made? would a suspense account be required to correct such an error?
To correct it you would credit rent receivable (to cancel the incorrect debit) and debit rant expense.
There would be no entry to the suspense account.
Hello, sir!
This lecture was really great. However, I’m confused on one thing viz. How do we know that debit side is right with the total of 124063 and that we have to find the difference of 4957 that is on the credit side obviously and credit it in suspense account?
I mean isn’t this also possible that credit side with the total of 119106 was right and that we could have added 4957 difference on the debit side of the suspense account?
Dear sir, kindly help me to solve this question.
After calculating your company’s profits for 2014, you discover that:
(A) a non-current asset costing £50000 has been included in the purchases account
(B) stationery costing £10000 has been included as closing stock of raw materials, instead of stock of stationery
These two errors had the effect of :(a) understating gross profit by £40000 and understating net profit by £ 50000
Or
(B) understating both gross profit and net profit by £40000
The answer is (a), may I know how to get the answer?
You must ask this question in the F3 Ask the Tutor Forum, and not as a comment on a lecture.
I wonder if someone can elaborate this for me.
The debit side of a company `s TB totals 1200 more than the credit side.
Answer is. Discount received of 600 has been debited to the discount allowed account.
Can anyone please explain the answer with the entries.
Thank you
The discount should have been credited to discount received as income (and not debited to discount allowed).
Debiting discount allowed wrongly makes the debits 600 too high.
Not crediting discounts received also makes the credits to low by 600
So putting the two together, the debits will be 1200 higher than the credits.
I got it. Many Thank Mr Moffat
You are welcome 🙂
excellent lecture thank u sir
You are welcome 🙂
Dear Sir,
In a trial balance with debit side total lower than credit side, then do we start the Suspense a/c with the difference on the debit side?
Yes 🙂
Whatever balance is needed in order to make the trial balance balance.
Hi,
Regarding the transaction (c) where the electricity payment of $200 is recorded throughout as $20, even though it doesnt affect balancing the trial balance do we not rectify the error?
Yes – of course we rectify.
However the question only asks for the entries in the suspense account, and this error does not require an entry in the suspense account.
Oh okay…Got it.
Thank you so much.
Hi John,
With regards to Example 2, could it be that the Dr balance is the one that’s actually incorrect and inflated by $4957? Why have we said that the Cr Balance is the one that’s incorrect?
It may be intuitive but i’m struggling to find a reason behind it…(without having to go through correcting all the errors first).
Cheers!
There is no balance of 4957!!
The trial balance should balance, and the suspense account is created to make it balance.
To make it balance we need an extra credit.
It is not a real account – as the lecture explains, it is just a way of keeping track of the amount of error that we have to find.
Great lecture. However, from the example, sales account is $93,870. What then happens to this balance after the mistake has been discovered and corrected i.e additional $6,300 is credited to it? Will it be restated? Because the fake account (Suspense) does not seem to have any effect apart from the reconciliation of the balances.
Yes – the sales account balance will be restated.
The only point of the suspense account is to keep a check on how much error is remaining. Once the balance on it falls to zero, then we know that we have found all of the errors 🙂
Thanks very much. I get it
simple to understand thanks
Brilliant resource for home studying,Great teacher
thank u
very clear
Excellent – its helping me alot as a teaching resource – Thanks
the lecture stops quarter way through
helps understanding of suspense accounts. thanks
very good