• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

June 2025 ACCA Exams

How was your exam? Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for June 2025 exams.
Get your discount code >>

double entry

Forums › FIA Forums › FA2 Maintaining Financial Records Forums › double entry

  • This topic has 2 replies, 3 voices, and was last updated 1 year ago by Ken Garrett.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • February 5, 2024 at 9:47 am #699775
    amirahmustafa
    Participant
    • Topics: 6
    • Replies: 5
    • ☆

    Daljit received a cheque for $950 from his insurance company in settlement of a claim for repairs to a van. The bookkeeper recorded the cheque correctly in the bank general ledger account, but did not complete the double entry. The total of the trial balance did not agree and a suspense account was opened to record the difference.

    What journal entry is required to eliminate the balance on the suspense account?

    a.
    Debit Suspense $950

    Credit Insurance $950

    Being correction of an error of omission

    b.
    Debit Insurance $950

    Credit Suspense $950

    Being correction of an error omission

    c.
    Debit Suspense $950

    Credit Van repairs $950

    Being correction of an error of omission

    d.
    Debit Van repairs $950

    Credit Suspense $950

    Being correction of an error of omission

    what is the answer? the answer is C why not A

    February 5, 2024 at 10:00 am #699777
    mrjonbain
    Moderator
    • Topics: 6
    • Replies: 2438
    • ☆☆☆☆☆

    The bank record is correct and therefore a suspense account credit was created to deal with the temporary imbalance until error could be found. Finding the error leads to debiting suspense account to close it off and crediting repairs. Insurance is not credited as the payment is related to a specific claim and not some reduction of the insurance expense. Hope this helps.

    February 5, 2024 at 12:59 pm #699784
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10591
    • ☆☆☆☆☆

    Another way of looking at it is:

    Assume that Daljit had had the van repaired before the insurance claim was settled and before the insurance money money was received. Assume, for simplicity that the repair costs paid by Daljit were $950.

    The entry to record that could be:

    Dr Repairs $950, Cr Cash 950.

    If the insurance company turned down the claim then that would be the end of it: a repair expense of $950.

    Now $950 is received from the insurance company and is correctly debited to cash, but no credit entry was made. The TB would show excess Drs of $950, so to make it balance a suspense account of $950 Cr is created. To correct the error the suspense account would be debited $950 and the Repair expense would be credited $950, effectively cancelling the earlier Dr in it. If you receive insurance money in full you haven’t incurred an expense as you have been fully compensated.

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • John Moffat on MA Chapter 26 Questions Variance Analysis
  • acowtant on Changes in group structure – examples – ACCA SBR lectures
  • Samantha96 on The Statement of Financial Position and Income Statement (part a) – ACCA Financial Accounting (FA) lectures
  • Ejueyitsi-Toju on What is Assurance? – ACCA Audit and Assurance (AA)
  • Goodness on Accruals and Prepayments (part b) – ACCA Financial Accounting (FA) lectures

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in