unit-9-errors-and-their-rectification

Unit-9 Errors And Their Rectification

Learn about the types of errors which are usually committed in the process of accounting, the procedure for locating and rectifying those errors.

What is Suspense Account? State its advantages.




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Learning Pundits Content Team

Written on Apr 16, 2019 4:49:21 PM

This method is used for rectifying the errors located before preparing the final accounts. After the corrections have been made, a revised Trial Balance is prepared which should normally tally. But, if it does not tally, it means there are still some errors which have not been detected. As, considerable time and effort have already been spent in locating and rectifying the errors, it may not be possible to wait any longer because it will delay the preparation final accounts.

Advantages:

  • The usual practice is to place the difference to Suspense Account and tally the Trial Balance for the time being. If total of the debit column in the Trial Balance is more than the total of its credit column total, the difference is placed to the credit of Suspense Account and the Trial, Balance will tally.
  • Similarly, if the credit column total is more than the debit column total the difference is placed to the debit of Suspense Account. The Suspense Account thus created is shown in the Balance Sheet and is carried forward to the next year.