DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : P. Sankara Rao
Designation : Lecturer
Branch : Commercial & Computer Practice
(CCP)
Institute : Govt. Polytechnic, Srikakulam
Year/Semester : I Year
Subject : Accountancy I
Subject Code : CCP102
Topic : Rectification of Errors
Duration : 50 Mts
Sub Topic : Suspense Account
Teaching Aids : PPT & Animation
CCP 102.110 1
Objectives :

On completion of this period, you would be able to:

 Understand the meaning of suspense of

account
 Grasp the accounting treatment of suspense
account
 Rectify one side errors through suspense
account

CCP 102.110 2
Recap :
In the earlier class we have already learnt:

 Various types of errors disclosed by Trial

balance
 Various types of errors not disclosed by Trial
balance
 Rectification of those errors by writing single
sentence in case of one side errors and journal
entry in case of two side errors

CCP 102.110 3
What is Suspense Account

When the trial balance does not agree, then the

efforts are made to make the trial balance agree. But
if these efforts fail and book keeper is unable to
locate where the error is made then temporarily the
difference of trial is transferred to an account called
“SUSPENSE ACCOUNT”

CCP 102.110 4
Objective Of Suspense Account :
The purpose of opening suspense account is for
making the trial balance to agree

 If the total of debit side is less, the balance is

transferred to Suspense account, and is shown
on the assets side of balance sheet
 If the credit side is less then suspense account is
to be credited and the balance is shown on the
liabilities side of balance sheet
CCP 102.110 5
Accounting Treatment :

 After locating the errors, rectification entries will

be passed through suspense account
 A suspense account is used when trial balance
does not agree and the suspense account will be
automatically closed if all the mistakes were
detected and errors are rectified

CCP 102.110 6
Example 1 :
Returns inwards book under cast by Rs.200

Error:
Returns inwards book is also known as
Sales Returns book. It always shows debit
balance. It was under cast by Rs.200

Rectification Entry:
Sales Returns A/c Dr 200
To Suspense A/c 200
CCP 102.110 7
Example 2 :

The sales book under cast by Rs.630

Error:
This is one side error. While totaling sales
book was under cast by Rs.630

Rectification Entry:
Suspense account Dr 630
To Sales Account 630
CCP 102.110 8
Example 3 :

A purchase of Rs.50 from x has been posted to

the debit of his book of his account

Correct Entry:
Purchases a/c Dr 50
To X a/c 50
Error:
Instead of crediting X a/c with Rs.50, it is
debited with Rs.50
CCP 102.110 9
Rectification Entry :

Suspense Account Dr 100

To X a/c 100

CCP 102.110 10
Exercise 1 :
There is a difference in trial balace which is posted to
Suspence Account. L ater the following errors were
noticed Pass necessary journal entries to rectify them..
account:

3. Rent paid Rs.1000 not debited to Rent A/c.

4. Commission received Rs.350 not posted to commission
a/c.
5. Sales returns book was under cast by Rs.900.
6. Goods purchased from Mahesh Rs.700 not posted to
Mahesh a/c.

CCP 102.110 11
Solution to Exercise :

1. Rent A/c Dr 1000

To Suspense A/c 1000

1. Suspense A/c Dr 350

To commission A/c 350

3. Sales Returns A/c Dr 900

To Suspense A/c 900

4. Suspense A/c Dr 700

To Mahesh A/c 700

CCP 102.110 12
Summary :

 Suspense A/c is opened to artificially Tally T.B

 Suspense A/c is used to correct one sided

errors

CCP 102.110 13
Quiz :

1. Suspense account is used to rectify

a) Two side errors
b) One side error
c) Three side error
d) None of the above

CCP 102.110 14
Assignment :
Rectify the following errors by means of Suspense
Account.

3. Wages paid Rs.500 debited to wages a/c Rs.50.

4. Cash received from Naresh Rs.4000 credit to
Naresh A/c with Rs.400.
5. Stationery Rs. 600 not posted to stationery a/c.
6. Goods sold to Rajesh Rs.900 debited to Rajesh
a/c with Rs.9000.

CCP 102.110 15