A payment of Rs. 7,500 to a creditor is correctly posted to the creditor's account but is omitted from the Cash Account. Which entry rectifies the error?
Correct answer: B. Debit Suspense Rs. 7,500 and credit Cash Rs. 7,500
- A. Debit Cash Rs. 7,500 and credit Suspense Rs. 7,500
- B. Debit Suspense Rs. 7,500 and credit Cash Rs. 7,500
- C. Debit Creditor Rs. 7,500 and credit Cash Rs. 7,500
- D. Debit Cash Rs. 7,500 and credit Creditor Rs. 7,500
Explanation
The creditor's account already contains the correct debit, but the credit to cash is missing. The rectification therefore credits Cash and debits Suspense to remove the trial balance difference.
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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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