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Meaning

 
It has already been said that all the errors, which affect one account, affect the agreement of trial balance at the end of the year, and ultimately delay the preparation of final accounts.

Therefore, in order to avoid the delay in the preparation of final accounts, the difference in the trial balance is put to suspense account. For example, if the debit side of trial balance exceeds the credit side, then difference is put on the credit side and suspense account shows a credit balance. When errors are located entries are passed with the help of suspense account and thus when all errors affecting the trial balance are located suspense account stands closed. If suspense account still shows a balance, then it is taken the balance sheet.
 

The suspense account will appear as an asset on the asset side of the balance sheet if it has a debit balance. Debit balance in the suspense account means that the credit side of the trial balance total is more than the debit side total. It will appear as a liability on the liabilities side of the balance sheet if it has credit balance. Credit balance in the suspense account means that the debit side of the trial balance total is more than the credit side total.

Let's Prctice

 

Quiz- 1
 

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Quiz- 2
 
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ZW1wdGVkIGFsbCB0aGUgcXVlc3Rpb25zLCBjbGljayBvbiB0aGUgRmluaXNoIFRlc3QgYnV0dG9uIHRvIGtub3cgeW91ciBzY29yZSBhbmQgdGhlIGNvcnJlY3QgYW5zd2Vycy4ifV19
 





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