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Which of the following errors could result in a suspense account being required to ‘balance’ the trial balance?
a. Cash received from credit customers treated as a cash sale
b. A supplier’s invoice for $32 recorded as $23 in the purchases account
c. Payments to suppliers of $647 recorded as $674 in the payables ledger
d. One page omitted from the purchase day book
I feel like the correct answer should be all of them? The supposed correct answer is (c) but I don’t know why any other answer would be incorrect like (b) for example which is a transposition error
(a) and (d) will definitely not result in a suspense account being required.
For (a), they will have debited cash and credited sales when they should have credited receivables. Do there is an equal debit and credit and the trial balance will still balance.For (d), the purchases day book is not part of the double entry and so they will have debited purchases and credited payables with the same figure (even though it will be the wrong figure). So again there is an equal debit and credit and the trial balance will still balance.
(c) definitely will mean that the trial balance will not balance because they have debited payables with the wrong figure (but will have credited cash with the correct figure – it not you would have been told). Therefore the trial balance will not balance.
It would seem that either you have typed (b) wrongly, or your book has mistyped it. It is clear that this business is using a purchase day book and therefore the invoice will not have been recorded in the purchases account but will instead have been listed in the purchase day book. Errors in the day book do not stop the trial balance balancing.
Have you watched my free lectures on suspense accounts, and on books of prime entry? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Another suspense question that confused me:
Sales returns of $460 have inadvertently been posted to the purchase returns, although the correct entry has been made to the accounts receivable control.
A suspense account needs to be set up for how much?
a. $460 debit
b. $460 credit
c. $920 debit
d. $920 creditI think the phrasing of this question confused me. I assumed from the question that 460 had been Debited to the Purchase Returns and Credited to the Receivable Control (by Double Entry) but wouldn’t that leave the trial balance unaffected meaning no suspense account? Why would ‘posted to the Purchase returns’ mean credited to purchase returns instead of debited?
I have watched the video on suspense accounts but not on Books of prime entries, will do that now thank you. I think i’m confused on how errors in the daybook affect the trial balance/suspense accounts
In regards to (a) since Receivables is a debit item and Sales a credit item, won’t the totals be unbalanced if Sales is credited instead of Receivables?
The question has not been worded very well.
Since the posting was made to purchase returns then usually the entry in purchase returns will be a credit entry so the question is intending for you to assume that they have credited purchase returns whereas they should have debited sales returns.
However, again, the question does not actually say that and so it is not a very good question. Where did you find the question? Hopefully it is not in one of the Revision Kits from BPP or Kaplan (the ACCA Approved Publishers) 🙂
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