suspence account

[jigga]

Please Explain and give an example of when to use suspence account when an error is located . Please give example in Intermediate AAT exam format.

[Paddywack51]

There are two reasons to create a suspense account.<BR><BR> At the end of the year if a Trial Balance does not agree a suspense account is created so that the two sides will equal. Steps are then taken to find out what errors and/or omissions have caused the inbalance. Errors are corrected by using journal entries. Hopefully the suspense account will then be cleared. <BR><BR>The other time a suspense account is created is when a transaction occurs whereby the double entry is unknown,eg a cash payment is received but the source is unknown, Dr bank a/c Cr Suspense a/c. When the reason for the payment becomes clear use the journal and Dr Suspense a/c Cr which ever a/c you need.<BR><BR>A suspense a/c is NEVER carried over into the Balance Sheet or Profit & Loss a/c

[gemmacooling]

Always rember that if you get a suspense account on your exam, some where you are going to have to balance that suspense account using journal entries because you will never carry it over into the profit and loss/ balance sheet.<BR>Usually you may get a question like the vat column on the sales returns day book was overcast by 60.00, so in this case you would Dr Suspense and Cr Sales - reducing the balance in the suspense.

hello<BR><BR>not sure if this will help, am a new user just strting to revise for my june exams. but the way i remember it is;<BR><BR>e.g if the net column of the sdb is OVERCAST by say £100 the entries will be<BR><BR>Net- £200 DR<BR>VAT - £17.50 DR<BR>Sales - £217.50 CR<BR><BR>when it should be<BR><BR>net - £100 DR<BR>VAT - £17.50 DR<BR>Sales - £117.50 CR<BR><BR>To correct this you would;<BR><BR>CR Suspense £100 - this compensates for the £100 that has been over cast<BR>DR Sales £100 - To reduce the amount of income coming into the business<BR><BR>to clear the suspense account of that entry you would debit suspense £100 and Credit sales<BR><BR>I really hope this helps, im revising this weekend so i'll be harrsing you all for help<BR><BR>emma