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Greetings sir.
For this question I understood why the answer is B), but would like further clarification as to why not A & C. C I assume because both the double entries would not be added, so trial balance unaffected – am I correct ? But A – the answer mentioned at back says a debit balance would be created. But I do not understand how – when sales is a credit, and if it is omitted, a credit suspense account should rather replace it to balance the trial balance in my understanding.
Also why in A) Ledger is mentioned and in B) Account is mentioned. What impact does the difference play.
Thankyou
A is wrong because the sales ledger is not part of the double entry and so any errors in it do not affect the trial balance (and so no suspense account).
C is wrong because if they have not written off a debt then there has been no debit and no credit. Therefore it does not stop the trial balance balancing, and therefore no suspense account.
A) Why in the answer section does for A) reason given is because a debit balance would be created?
B)
1) Is sales ledger a book of prime entry, or a memorandum? If neither, then why is Sales Ledger not part of the double entry ? Is it not the case : Dr. Cash/Receivables Cr. Sales ?2) What is the difference between Sales Ledger and Sales Account ?
Thankyou
A. Even if the business does not use control accounts and the sales ledger was then part of the double entry, then it would be the debit entry that was missing and this would then need a debit in the suspense account.
The sales ledger (or receivable ledger) is the book containing an account for each customer and is a memorandum account.
The sales account is an account in the nominal/general ledger and is credited with all the sales.
This is all explained in my lectures on Books of Prime Entry.
Thankyou sir, so sales ledger is another name for receivables ledger (the memorandum).
But I need one clarification – you stated “even if the sales ledger was part of the double entry, then it would be the debit entry that was missing”
How is that when A) states the ommission of $130 sale from the sales ledger. So that would be a credit entry missing. Sales is Cr. If Cr entry is missing, then the gap would be in the Cr side not Dr side.
Please -assuming it was a double entry, could you demonstrate the journal entry of relevant accounts, including the suspense account, if need be, to substantiate the answer of the Revision kit that a debit balance would be created, which you also are stating.
Thanks for the rest of the answers.
Yes the sales ledger is another name for the receivables ledger.
When a sale is made on credit the entry is to debit receivables and credit sales.
If the sales ledger was part of the double entry then if the entry for a sale is missing then it is the debit that is missing because the sales ledger has a receivables account for each customer.Again, have you watched my lectures on Books of Prime Entry?
Oh my, now I understand! I was again confusing the sales ledger as a sales account, whereas infact it means receivables. So yes, a debit side would be missing.
Yes ofcourse, I have indeed watched your lecture on Prime Entry a few months back – I remember it was an excellent lecture, however due to the overload of the all the topics in FA, I think I might need a revisit to refresh. Sometimes one does go blank on some of the terminologies learnt early on 🙂
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