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Free Correction of Errors and Suspense Accounts MCQs with Answers

34 Correction of Errors and Suspense Accounts MCQs from Accounting, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.

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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34 questions · page 2 of 2

21. A debit sale of goods to Ahmed for Rs. 6,000 is entered in Ahmed's account as Rs. 600, while the Sales Account is correctly credited. Which entry rectifies the error?

  • A. Debit Suspense Rs. 5,400 and credit Ahmed Rs. 5,400
  • B. Debit Ahmed Rs. 5,400 and credit Suspense Rs. 5,400
  • C. Debit Ahmed Rs. 6,000 and credit Sales Rs. 6,000
  • D. Debit Sales Rs. 5,400 and credit Ahmed Rs. 5,400

Explanation: Ahmed's account is short-debited by Rs. 5,400, while the Sales Account is correct.

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Correct answer: Debit Ahmed Rs. 5,400 and credit Suspense Rs. 5,400

22. 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?

  • A. Debit Customer Rs. 4,800 and credit Suspense Rs. 4,800
  • B. Debit Cash Rs. 4,800 and credit Customer Rs. 4,800
  • C. Debit Suspense 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.

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Correct answer: Debit Suspense Rs. 4,800 and credit Customer Rs. 4,800

23. A cheque issued to a supplier for Rs. 3,200 is entered in the Cash Book, but no entry is made in the supplier's account. Which rectifying entry is correct?

  • A. Debit Cash Rs. 3,200 and credit Supplier Rs. 3,200
  • B. Debit Suspense Rs. 3,200 and credit Supplier Rs. 3,200
  • C. Debit Supplier Rs. 3,200 and credit Cash Rs. 3,200
  • D. Debit Supplier Rs. 3,200 and credit Suspense Rs. 3,200

Explanation: The Cash Book already contains the credit, but the supplier's account lacks the corresponding debit.

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Correct answer: Debit Supplier Rs. 3,200 and credit Suspense Rs. 3,200

24. A rent payment of Rs. 2,500 is posted to Rent Account as Rs. 5,200, while the Cash Account is correctly credited. Which entry corrects the error?

  • A. Debit Suspense Rs. 2,700 and credit Rent Rs. 2,700
  • B. Debit Rent Rs. 2,700 and credit Suspense Rs. 2,700
  • C. Debit Rent Rs. 5,200 and credit Cash Rs. 5,200
  • D. Debit Cash Rs. 2,700 and credit Rent Rs. 2,700

Explanation: Rent is over-debited by Rs. 2,700, so it must be credited by that excess amount.

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Correct answer: Debit Suspense Rs. 2,700 and credit Rent Rs. 2,700

25. 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?

  • 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.

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Correct answer: The credit total exceeds the debit total by Rs. 13,500

26. A purchase of furniture for Rs. 20,000 is debited to Furniture Account and credited to the supplier's account, but the amount is entered in the books as Rs. 2,000 in both accounts. Which statement is correct?

  • A. The trial balance disagrees by Rs. 18,000
  • B. The trial balance disagrees by Rs. 20,000
  • C. The trial balance agrees, but Furniture is overstated
  • D. The trial balance agrees, but Furniture and the supplier are understated

Explanation: Both the debit and credit are understated by Rs. 18,000, so the trial balance still agrees.

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Correct answer: The trial balance agrees, but Furniture and the supplier are understated

27. A cash purchase of office stationery for Rs. 1,800 is entered in Stationery Account as Rs. 8,100, and Cash Account is correctly credited. Which entry rectifies the error?

  • A. Debit Suspense Rs. 6,300 and credit Stationery Rs. 6,300
  • B. Debit Stationery Rs. 6,300 and credit Suspense Rs. 6,300
  • C. Debit Cash Rs. 6,300 and credit Stationery Rs. 6,300
  • D. Debit Stationery Rs. 1,800 and credit Cash Rs. 1,800

Explanation: Stationery is over-debited by Rs. 6,300, so the excess debit is removed by crediting Stationery.

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Correct answer: Debit Suspense Rs. 6,300 and credit Stationery Rs. 6,300

28. An amount of Rs. 9,000 paid for repairs is entered in Repairs Account but is omitted from the Cash Account. Which type of error is this?

  • A. Error of complete omission
  • B. Error of commission
  • C. Error of principle
  • D. Compensating error

Explanation: The transaction is recorded, but one ledger account is not posted, which is an error of commission in this classification.

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Correct answer: Error of commission

29. 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?

  • A. The books must contain no further error
  • B. A debit entry of Rs. 1,250 is still required in Suspense
  • C. A credit 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.

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Correct answer: A credit entry of Rs. 1,250 is still required in Suspense

30. A debit balance of Rs. 7,000 in the Trial Balance is entered on the credit side of the trial balance. Which rectifying entry is required?

  • A. Debit the relevant account Rs. 7,000 and credit Suspense Rs. 7,000
  • B. Debit Trial Balance Difference Rs. 7,000 and credit Suspense Rs. 7,000
  • C. Debit Suspense Rs. 7,000 and credit Trial Balance Difference Rs. 7,000
  • D. Debit Suspense Rs. 14,000 and credit Trial Balance Difference Rs. 14,000

Explanation: The debit balance should have increased the debit total by Rs. 7,000 but instead increased the credit total by Rs. 7,000.

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Correct answer: Debit Suspense Rs. 14,000 and credit Trial Balance Difference Rs. 14,000

31. Cash sales of Rs. 6,000 are entered in the Sales Book instead of the Cash Book. What is the effect before correction?

  • A. The trial balance agrees, but cash is understated
  • B. Cash and sales are both understated
  • C. Debtors and sales are both overstated
  • D. The trial balance does not agree

Explanation: The Sales Book posting credits Sales and debits the debtors account, while the Cash Account receives no debit.

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Correct answer: The trial balance agrees, but cash is understated

32. Bank charges of Rs. 450 shown on the bank statement have not been entered in the business books. Which entry records the omission?

  • A. Debit Suspense, credit Bank Charges
  • B. Debit Bank Account, credit Bank Charges
  • C. Debit Bank Charges, credit Bank Account
  • D. Debit Bank Charges, credit Suspense Account

Explanation: Bank charges are an expense, so Bank Charges Account is debited. The bank balance decreases, requiring a credit to Bank Account.

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Correct answer: Debit Bank Charges, credit Bank Account

33. Under traditional manual bookkeeping, an error relating to a previous accounting period is discovered after the accounts for that period have been closed. Which account is normally used for its correction?

  • A. General Reserve Account
  • B. Current Trading Account
  • C. Suspense Account
  • D. Profit and Loss Adjustment Account

Explanation: A prior-period error is normally corrected through the Profit and Loss Adjustment Account so that the current period's ordinary profit is…

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Correct answer: Profit and Loss Adjustment Account

34. The debit total of a trial balance is short by Rs. 1,200 because the total of the Discount Allowed Account was accidentally left out of the trial balance. Which entry corrects the error?

  • A. Debit Discount Allowed Rs. 1,200, credit Suspense Rs. 1,200
  • B. Debit Suspense Rs. 1,200, credit Discount Allowed Rs. 1,200
  • C. Debit Discount Received Rs. 1,200, credit Suspense Rs. 1,200
  • D. Debit Discount Allowed Rs. 1,200, credit Cash Rs. 1,200

Explanation: Discount Allowed has a debit balance, so it must be debited to bring its omitted amount into the trial balance.

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Correct answer: Debit Discount Allowed Rs. 1,200, credit Suspense Rs. 1,200
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