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Why a suspense account is SOFP account???
And How we present it in the final accounts if all errors does not identified and corrected??Q#3 in text book written that (…in the books of prime entry the analysis columns of discount allowed, discount received, and sales tax are memorandum columns and they are not part of double entry) how this is right.???
We know that these all are part of double entry then how they are memorandum columns?The books of prime entry for sales and purchases is the sales day book and purchases day book and neither of these is part of the double entry system – they are just lists from which posting are made.
I’m sorry, but I don’t really understand what your text book is trying to say.
It is an SOFP amount because that way the error is not forgotten about and it will be carried forward to the following period. If it went to P&L it would simply disappear in the net profit.
No proper accountant would be willing to show a suspense amount in the final set of accounts. It is evidence that the accounts are wrong and the accountant is incompetent. Small amounts might be written off to P&L but most auditors would be reluctant yo let that pass.
how to learn suspense account completely from basic, i have many problem with this.????
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