Dear Sir, Please advice.
I. A suspense account shows a credit balance of $130, which of the following could be due to?
1) Omitting a sales of $130 from sales ledger
2) Recording a purchase of $130 twice in the purchase account
3) Failing to write off a bad debt of $130
4) Recording an electricity bill paid of $65 by debiting the bank account and crediting the electricity account.
Am I right to say a credit balance was due to Debit side is more than Credit Side.
1) Cr. Sales and Dr. Suspense $130
2) Cr. Purchase and Dr. Suspense $130
3) Dr. Bad debt and Cr. Receivable (no effect)
4) No imbalance incur.
Any incorrect entry above? Answer is 2), how about 1) ?
II. A suspense account shows a debit balance of $100, which of the following could be due to?
1) Entering $50 received from A Turner on the debit side of A Account
2) 1) Entering $50 received from A Turner on the credit side of A Account
3) Undercasting the sales day book by $100
4) Undercasting the purchases book by $100
My understanding is
1) Cr. A Turner $200 and Dr. Suspense A/C $200---- (x)
2) Correct entry no error -----(x)
3) Dr. Sales day book $100 and Cr. Suspense A/C$100 (?)
4) Dr. Purchase book$100 and Cr. Suspense A/C$100 (?)
Answer is 4) only. Where did I get it wrong?
Thank you for the time and effort.
Ask the Tutor ACCA FA
Suspense Account
9y ago#1Surely you have answers to these questions in the same book in which you found them? If not, then you should be using Revision Kits from one of the ACCA approved publishers - they contain lots of exam standard questions together with answers and explanations.
1 You are correct in saying that a credit balance on the suspense account means that the debits add up to more than the credits.
2. The sales ledger is not part of the double entry and is therefore not relevant when preparing a trial balance (and therefore does not give rise to a suspense account).
3. Are you sure that the question says for 4 "undercasting the purchases book by $100"?
If the purchases day book is undercast then it will not stop the trial balance balancing (and therefore not result in a suspense account) because the debit to purchases and the credit to payables will both be wrong by the same amount.
If however the question says that the purchases account has been undercast by $100, then the answer is certainly "4" because the purchases account (which is a debit) needs an extra debit of $100.
Dear Sir,
The questions are from BPP learning media.
1) I am sorry, your are right sir. Should be "Purchase Account" not purchase day book.
2) What you mean was, errors incurred relating to Sale Day Book, Sales Ledger or Purchase Day Book would not affect trial balance?
Thank you!
9y ago#3Errors in the sales day book, sales ledger, and purchase day book do not affect the trial balance balancing, as I wrote in my previous reply.
My free lectures on Books of Prime Entry explain how these books are used.
shouldn't a credit balance result to an increase on the credit side?
6y ago#5If you are referring to the questions above, then a credit balance on the suspense account is there because the debit side of the trial balance was greater than the credit side of the trial balance.
Have you watched my free lectures on suspense accounts? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
I was stuck with this problem for days.
I found that:
Errors in the sales day book and other books may actually affect the balancing of the trial balance, and may require a suspense account.
When a sales day book is undercast, we need a suspense account. The question does not say that the individual ledger accounts has also been undercast. The assumption here is that the individual account entry has been correctly entered in their ledger.
This remains one of the major tricks in correction of errors. It is most like going to be one of the errors to be found in correction errors questions.
5y ago#7What you have written is not correct.
If the sales day book (receivables journal) is undercast then the trial balance will still balance (and therefore no suspense account is needed) because the same total will have been entered in both the receivables ledger control account and in the sales account.
I do suggest that you watch my free lectures on suspense accounts and on Books of Prime Entry.
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