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ACCA Applied Knowledge · Financial Accounting · Suspense accounts

Which one of the following errors will be revealed by extracting a trial balance and so requires a suspense account entry when found?

The $480 credit and $840 debit error is revealed by the trial balance because the two sides of the entry differ by $360. That difference would be held in a suspense account until corrected. The other errors leave debits equal to credits.

  1. AA credit note received from a supplier was never recorded in any account
  2. BRent paid was debited to the rates account and credited to cash
  3. CA cash payment of $480 was credited to cash but debited to the expense account as $840Correct
  4. DThe purchase of a machine was debited to the purchases account and credited to the supplier's account

Explanation

A payment credited as $480 to cash but debited as $840 to the expense creates a $360 excess of debits, which is revealed by the trial balance and initially held in suspense. The other options either omit both sides or post equal amounts to wrong accounts, so the trial balance still agrees.

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