CMA Foundation · Fundamentals of Financial and Cost Accounting · Trial Balance
The trial balance of Sharma & Co. showed debits Rs 3,48,000 and credits Rs 3,40,000. The difference was put in a suspense account. Later these were found: (i) purchases returns Rs 3,000 posted to the debit of purchases returns account; (ii) a sales invoice of Rs 5,000 omitted entirely from the books; (iii) discount allowed Rs 1,500 posted to the credit of discount account. What is the balance of the suspense account as per the original trial balance, and which of these errors does NOT affect it?
The suspense account carries a credit balance of Rs 8,000 because debits exceed credits by that amount. Among the errors, the omission of the Rs 5,000 sales invoice from all books does not affect the trial balance totals, since neither side was recorded, so it does not affect suspense.
- ACredit Rs 8,000; error (ii) does not affect itCorrect
- BDebit Rs 8,000; error (ii) does not affect it
- CCredit Rs 8,000; error (i) does not affect it
- DCredit Rs 8,000; all three errors affect it
Explanation
Debits exceed credits by Rs 8,000, so suspense is credited with Rs 8,000 to balance. Error (i) puts Rs 3,000 on the wrong side (effect 6,000), and (iii) puts Rs 1,500 on the wrong side (effect 3,000); together 9,000 of debit-side shortage corrections... in net the errors explain the difference in direction needing review, but error (ii) is complete omission with no effect on totals. Hence suspense is credit Rs 8,000 and (ii) does not affect it.
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