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suspense account
11-24-2004, 10:30 PM
Post: #1
suspense account
hi to all,
i have already placed a question regarding suspense account
but i did not get satisfactory answer.After all my search i just came
to know that suspense account is used in many cases......like when we find any difference in trial balance and we don,t know about error...
......when we detect the error we pass rectifying entry and that entry
close this suspense account and when we fail to detect the error
than this temporary accounts goes to the balance sheet.....but now the
question is that it's a temorary account so it should not go the balance sheet............if it goes to the balance sheet than what is
the logic behind this.
I have some other problem as well..........suppose we are
passing entries in the journal...............the orignial entry was
cash account 1000
to sales 1000
and we pass the entry by mistake
cash account 1000
to sales 100
now after few days we came to know that we have commited a mistake and in accounting as we always pass rectifying entries to correct the mistakes we will pass the following entry......because
it's a doulbe entry book keeping system.
suspense account....900
to sales 900
now the sale is all right but as i don,t know much about
accounting i don,t know what should we do with suspense account...we
can,t put this into the trial balance............because it will cause some difference in trial balance.............
Moreover if a company whose turn over is in trillions has a suspense account with the balance of only 1 Rs....
can that company can follow the materaility principle and neglect
the suspense account or this account has some importance for that
company...........................
i hope you people will answer..........
bye..............
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11-25-2004, 05:55 PM
Post: #2
 
smraza ....plz reply himmmm )
bc smraza hi aitna deyail posts ko read kerta hai ..p
sorry no hard feelings

Never seek advice from a Chartered Accountant. They are trained to find problems not solutions.
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11-27-2004, 05:37 AM
Post: #3
 
Actually In my view your question is incomplete.When we only have to adjust our sales, then we will only balance the supense account and we will not bring it to the P&L or Balance sheet.

like supense 900
to sales 900

now supense account will be balanced by 900
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04-11-2006, 02:26 AM
Post: #4
 
hi i am also having a headache on supense account.May i know if u understand this???tks
QN The trial balance did not agree (debit total=95000; cr total =94800).He opened a suspense account to enable him to proceed with preparation of the draft final accounts.

Ans suspense account
180 bal b/d 200
65 45
== ==

MY DOUBTANYBODY knows why the bal b/d 200 is on the credit side, and not the debit side?? since if bal c/d is 200 at the cr side ,then bal b/d should be 200 on the dr side right??? i spent 1 day thinking this, why is this so complicated?!!!!
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04-11-2006, 04:45 PM
Post: #5
 
Hi Zahoor,
The suspense account would have been created after this entry...
Cash a/c 1000 (dr)
Sales a/c 100 (cr)
consider these are the only two accounts, if you prepare the trial balance now, the credit side will fall Rs 900 shorter...to make both sides equal you will open a Suspense A/C with Rs 900 Cr bal...
Now the rectifying entry comes i.e,
Suspense a/c 900 (dr)
Sales a/c 900 (cr)

this entry will make the balance in suspense a/c zero...
is it clear?...
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04-13-2006, 05:22 PM
Post: #6
 
Yup smraza is back to read the long posts [Wink]
maani has given the right answer to the question, now why the suspense a/c is taken to balance sheet, the logic behind that is to carry the account till the error is identified. If we charge the same to the P&L, then it will not be available for checking, as the difference of Rs.900/- may be the net of Rs.10,000/- and Rs.9,100/- (or any other figures) as there can be more than one mistakes.
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