A credit sale of Rs. 15,000 is recorded in the Sales Account as Rs. 15,000 but is posted to the customer's account as Rs. 1,500. What is the effect before correction?
Correct answer: B. The credit total exceeds the debit total by Rs. 13,500
- A. The debit total exceeds the credit total by Rs. 13,500
- B. The credit total exceeds the debit total by Rs. 13,500
- C. The trial balance remains equal because both accounts are posted
- D. The debit total exceeds the credit total by Rs. 15,000
Explanation
The customer's debit is short by Rs. 13,500, while the Sales credit is correct. Therefore, total credits exceed total debits by Rs. 13,500, creating a credit balance in Suspense.
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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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