ACCA Applied Knowledge · Financial Accounting · Suspense accounts
A trial balance is extracted and the total of debit balances exceeds the total of credit balances by $900. Which one of the following errors would explain the entire difference?
Debiting both payables and bank for $450 instead of crediting bank doubles the debit effect, overstating debits by $450 and understating credits by $450, so debits exceed credits by $900. The other options either give credit excesses or are not the described entry.
- AGoods sold on credit for $900 were recorded only in the sales account
- BA payment of $450 to a supplier was debited to the payables account and also debited to the bank accountCorrect
- CA receipt of $900 from a customer was recorded by debiting bank only
- DAn invoice for $900 of purchases was credited to the purchases account and credited to payables
Explanation
Debiting both payables and bank for $450 means the bank entry should have been a credit. The debit total is overstated by $450 and the credit total understated by $450, giving a $900 excess of debits. A receipt debited to bank only leaves debits higher by $900 but only if no credit was posted; however, that is a single-sided entry, not the described one. The sales-only entry is a credit-only error and would make credits higher. The purchases credit with a payables credit makes credits higher.
Did you get it right without looking?
One question tells you little. A timed set on Suspense accounts shows your real accuracy, how long you take and where you lose marks.
More Suspense accounts questions
- A trial balance shows total debits of $184,600 and total credits of $183,900. The difference is being investigated. It is found that a payme…
- A purchase of goods on credit from supplier Rao for $4,500 was correctly entered in the payables ledger but was omitted entirely from the ge…
- A bookkeeper records a cash payment of $850 for insurance by debiting insurance expense with $580 and crediting bank with $850. What adjustm…
- Which error would NOT be revealed by a trial balance and therefore would not cause a suspense account to be opened?
- Draft profit is $60,000. Closing inventory of $8,000 was omitted from the draft accounts: it was not counted in the closing inventory figure…
- A bookkeeper transposed digits when posting a $7,200 purchase invoice, entering $2,700 in the payables ledger and the correct figure of $7,2…