Control Account Reconcilations and Suspense Accounts

The payables ledger takes each individual item from the purchases day book, so if the item is not listed in the day book then it will not be in the ledger, and so the list of balances will be wrong. The control account takes the total from the purchases day book, but if the item is not listed then the total will be wrong, and so the balance on the control account will be wrong. So.....they will both be wrong, but they will both be wrong by the same amount. If this was the only mistake, then the control account balance would be the same as the total of the list. (The free lectures on Books of Prime Entry will help you. Our lectures are a complete course for Paper F3 and cover everything you need to be able to pass the exam well :-) )

I see! So the impact of the omission in any primary entry books is there would be errors in both individual ledger and control account right?

Correct :-)

Thank you very much. And could you please help me with his also? Actually, this is the other post that I posted. The totals of the a company’s trial balance are as follows debit $635,000 credit $627,500. Which of the following errors in isolation could account for the difference? 1. The omission from the trial balance of an accruals account totalling $7,500. 2. The rent expense account of $7,500 has been recorded twice in the trial balance. 3. The omission from the trial balance of a prepayment account totalling $7,500. 4. Discounts received of $3,750 has been credited in error in the payables control account. (A) None of the above (B) 1,2 and 4 (C) 1 and 2 (D) 2,3 and 4 Answer: (C) I have no idea at all except the #4 will create a suspense account………….. And according to another question which was finding errors that would require the use of a suspense account to correct the error, said a choice,”Depreciation expense has been recorded twice.” would require correcting but would not require a suspense account because it will not lead to an imbalance in the trial balance. For that reason, I thought the #2 which says the rent expense recorded twice will not lead to an imbalance in the trial balance. Anyway, the question is asking to find which would lead to an imbalance in the trial balance right? Would you please explain further? I need some detailed explanations.

Have you actually watched all of my free lectures on this website? I really cannot type out all of the lectures again here!!! 1 Accruals are a credit balance, so missing it out means that the credits are 7,500 to small. So this could be the reason for the difference. 2 Rent expense is a debit balance. So listing the balance twice makes the debits too high by 7500. So this could be the reason for the different. 3 Prepayments are a debit balance. Missing this out would make the debits too low. So this can not be a reason for the debits being too high. 4 The fact it will create a suspense account is of no relevant at all! (In fact it would not create a suspense account anyway). Crediting the wrong account does not affect the trial balance - all it checks is that the debits equal the credits. I really do suggest that you watch the free lectures. They are a complete course for Paper F3 and cover everything you need to be able to pass the exam well.

Thank you very much again. And I'll rewatch all the lectures again

You are welcome :-)