A cheque for Rs. 4,800 received from a customer is entered in the Cash Book but is not posted to the customer's account. Which entry is required when a suspense account is in use?
Correct answer: B. Debit Suspense Rs. 4,800 and credit Customer Rs. 4,800
- A. Debit Customer Rs. 4,800 and credit Suspense Rs. 4,800
- B. Debit Suspense Rs. 4,800 and credit Customer Rs. 4,800
- C. Debit Cash Rs. 4,800 and credit Customer Rs. 4,800
- D. Debit Customer Rs. 4,800 and credit Cash Rs. 4,800
Explanation
The cash receipt has already increased Cash, but the customer's account still needs a credit. Since the missing credit caused the difference, Suspense is debited and the customer is credited.
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About Correction of Errors and Suspense Accounts
Accounting errors are corrected by journal entries after identifying whether the mistake affects one account or both sides of double entry. Suspense accounts temporarily hold an unexplained trial balance difference and must be cleared, while errors of omission, commission, principle, original entry and reversal require different corrections.
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