What is a suspense account used for?

holding the difference when a trial balance does not agree. It is temporary, until the errors are found.

A trial balance has debits of $41 200 and credits of $41 500. What entry opens the suspense account?

debit $300. The balance goes on the side with the smaller total.

Which error would need the suspense account in its correction?

a sales journal total that was undercast. Only one account is wrong, so the totals disagreed.

The wages account was debited with $520 where it should have been $250. The bank entry was correct. What is the correction?

debit suspense $270, credit wages $270. Wages has $270 too much on the debit side, so it is credited.

In which book of prime entry is the correction of an error recorded?

the general journal. Each correction has a debit, a credit and a narrative.

What should the balance on the suspense account be once all errors are corrected?

nil. If a balance is left, there are still errors to find.

Correcting errors and the suspense account · Cambridge IGCSE Accounting

In plain words

When the two totals of a trial balance disagree, the financial statements still have to be started. So the difference is parked in a temporary account, the suspense account, until the errors are found.

Each error is then corrected with a journal entry. The skill is asking the right two questions: what was done, and what should have been done?

6 things to know

Errors are corrected by entries in the general journal, each with a narrative.
If the trial balance totals do not agree, the difference is entered in a suspense account, on the side with the smaller total. This is a temporary measure.
An error that made the totals disagree affects one side only. Correcting it needs one entry in the account that is wrong, and the opposite entry in the suspense account.
An error that did not affect the totals, such as omission or commission, is corrected without the suspense account.
To reverse an entry made on the wrong side, enter double the amount: once to cancel it and once to put it right.
When every error has been corrected, the suspense account has no balance left and is closed.

Worked example

The debit total of a trial balance is $90 less than the credit total. It is found that rent of $450 was correctly credited to bank but debited to the rent account as $360. Open the suspense account and correct the error.

The debit side is $90 short, so the suspense account is opened with a debit of $90.
The rent account was debited with $90 too little (450 − 360).
Correction: debit rent $90, credit suspense $90.
The suspense account now has a debit of $90 and a credit of $90, so it is closed.

Tips and tricks

Use the suspense account only if the error broke the balance of the trial balance. If the debits and credits were equal, though wrong, the correction is between the two real accounts.
Check: after all the corrections, the suspense account must have nothing left on it.

6 questions, about 2 minutes.

It lands in your notebook with its questions as flashcards.

Correcting errors and the suspense account: 6 questions and answers

These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.

What is a suspense account used for?
- recording cash sales
- holding the difference when a trial balance does not agree (the answer)
- recording the owner's drawings
- storing unpaid invoices
It is temporary, until the errors are found.
A trial balance has debits of $41 200 and credits of $41 500. What entry opens the suspense account?
- debit $300 (the answer)
- credit $300
- debit $82 700
- credit $41 500
The balance goes on the side with the smaller total.
Which error would need the suspense account in its correction?
- an invoice left out of the books entirely
- an asset debited to an expense account
- a sales journal total that was undercast (the answer)
- a sale posted to the wrong customer
Only one account is wrong, so the totals disagreed.
The wages account was debited with $520 where it should have been $250. The bank entry was correct. What is the correction?
- debit wages $270, credit suspense $270
- debit suspense $270, credit wages $270 (the answer)
- debit wages $270, credit bank $270
- debit bank $270, credit wages $270
Wages has $270 too much on the debit side, so it is credited.
In which book of prime entry is the correction of an error recorded?
- the cash book
- the sales journal
- the general journal (the answer)
- the petty cash book
Each correction has a debit, a credit and a narrative.
What should the balance on the suspense account be once all errors are corrected?
- equal to the profit
- equal to the original difference
- nil (the answer)
- a debit balance
If a balance is left, there are still errors to find.

6 questions

Tap an answer and you’ll see straight away whether it’s right, and why.

Worksheet

3 questions, 7 marks. Write your answers on paper, then check them.

Correcting errors and the suspense account

Cambridge IGCSE Accounting 0452 · 7 marks · papermunch.org

Name ______________________________ Date ______________

Sales of $275 to Ana were credited to the sales account but not entered in Ana's account. State the correcting entry.[2]
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Debit Ana $275. Credit suspense $275.
I got this one
A payment of $60 for stationery was debited to the purchases account. State the correcting entry.[2]
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Debit stationery $60. Credit purchases $60. (The suspense account is not used: the totals were not affected.)
I got this one
Cash of $80 received from a customer, Raj, was debited to Raj's account and credited to the cash account. State the correcting entry and explain the amount.[3]
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Debit cash $160. Credit Raj $160. The amount is doubled: $80 to cancel the wrong entry and $80 to make the correct one.
I got this one

Answers: Correcting errors and the suspense account

1. Debit Ana $275. Credit suspense $275.
2. Debit stationery $60. Credit purchases $60. (The suspense account is not used: the totals were not affected.)
3. Debit cash $160. Credit Raj $160. The amount is doubled: $80 to cancel the wrong entry and $80 to make the correct one.