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CMA Intermediate · Financial Accounting · Final Accounts of Commercial Organisations

At the end of the year, the trial balance of Sharma Traders did not agree, and the debit side was short by ₹4,500. Which of the following is the correct way to deal with the difference until the errors are located?

The shortfall on the debit side is debited to Suspense Account to make the trial balance agree. It is shown in the Balance Sheet until the errors are traced and rectified, after which the Suspense Account is closed.

  1. ACredit the difference to Suspense Account and carry it to the Balance Sheet
  2. BDebit the difference to Suspense Account and carry it to the Balance SheetCorrect
  3. CTransfer the difference to the Profit and Loss Account as an expense
  4. DAdjust the difference against the Capital Account of the proprietor

Explanation

If the debit side is short, the difference must be debited to a Suspense Account to make the two sides agree. The balance stays in the Balance Sheet until the errors are found and rectified. Crediting it would widen the gap rather than close it.

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