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ACCA Applied Knowledge · Financial Accounting · Suspense accounts

A trial balance fails to agree, with total debits exceeding total credits by $740. The difference is posted to a suspense account. Which statement about the suspense account balance is correct?

The suspense account has a credit balance of $740. Because total debits exceed total credits by that amount, a credit entry is needed to balance the trial balance, and the suspense account holds that temporary credit until the errors are found and corrected.

  1. AIt is a credit balance of $740Correct
  2. BIt is a debit balance of $740
  3. CIt is a debit balance of $1,480
  4. DIt is a credit balance of $370

Explanation

Debits exceed credits by $740, so a credit of $740 is needed to make the trial balance agree. The suspense account therefore carries a credit balance of $740. A debit balance would make the imbalance worse, and the difference is not halved or doubled.

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