A debit balance of Rs. 1,250 in the suspense account remains after all known trial balance errors have been corrected. What does this indicate?
Correct answer: B. A credit entry of Rs. 1,250 is still required in Suspense
- A. The books must contain no further error
- B. A credit entry of Rs. 1,250 is still required in Suspense
- C. A debit entry of Rs. 1,250 is still required in Suspense
- D. The amount should be transferred to Capital Account
Explanation
A debit balance means Suspense still has more debits than credits by Rs. 1,250. A credit entry of the same amount is needed after identifying the remaining error, and the amount should not be transferred to capital merely to close the account.
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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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