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Difference of totals of both debit and credit side of trial balance is transferred to :
- a)Trading account
- b)Suspense account
- c)Difference account
- d)Miscellaneous account
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Difference of totals of both debit and credit side of trial balance is...
Suspense Account in Trial Balance
Explanation:
When there is a difference in the totals of the debit and credit side of the trial balance, it implies that there has been an error in the accounting process. In such a situation, the difference is transferred to a suspense account. The suspense account is a temporary account created to hold the difference until the error is traced and rectified.
Reasons for Difference in Trial Balance:
There can be several reasons for the difference in the trial balance, including:
- Errors in recording transactions
- Omissions in recording transactions
- Wrong totaling of accounts
- Errors in balancing accounts
Role of Suspense Account:
The Suspense account plays a crucial role in the accounting process as it helps in identifying errors and rectifying them. The suspense account acts as a holding account, where the difference in the trial balance is transferred until the error is discovered and rectified.
Rectification of Errors:
Once the error is identified, it is rectified, and the necessary adjustments are made. The correction entry is then passed to transfer the balance from the suspense account to the correct account.
Conclusion:
In conclusion, the suspense account is used to hold the difference in the trial balance until the error is discovered and rectified. It is a temporary account that helps in identifying errors and ensures that the final accounts are accurate.
Explanation:
When there is a difference in the totals of the debit and credit side of the trial balance, it implies that there has been an error in the accounting process. In such a situation, the difference is transferred to a suspense account. The suspense account is a temporary account created to hold the difference until the error is traced and rectified.
Reasons for Difference in Trial Balance:
There can be several reasons for the difference in the trial balance, including:
- Errors in recording transactions
- Omissions in recording transactions
- Wrong totaling of accounts
- Errors in balancing accounts
Role of Suspense Account:
The Suspense account plays a crucial role in the accounting process as it helps in identifying errors and rectifying them. The suspense account acts as a holding account, where the difference in the trial balance is transferred until the error is discovered and rectified.
Rectification of Errors:
Once the error is identified, it is rectified, and the necessary adjustments are made. The correction entry is then passed to transfer the balance from the suspense account to the correct account.
Conclusion:
In conclusion, the suspense account is used to hold the difference in the trial balance until the error is discovered and rectified. It is a temporary account that helps in identifying errors and ensures that the final accounts are accurate.
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Community Answer
Difference of totals of both debit and credit side of trial balance is...
Yes...because at the end of accounting period ..when trial balance is prepared but balance of both debit and credit comes to be unequal ..then suspence account is used just to balance the amount ..and after that accounting period whenever you find that particular mistake you have done before...then you will be able to correct them by debiting or crediting sus account....till then its a suspence thus we used it!.....
hope u understnd!!!
hope u understnd!!!
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Difference of totals of both debit and credit side of trial balance is transferred to :a)Trading accountb)Suspense accountc)Difference accountd)Miscellaneous accountCorrect answer is option 'B'. Can you explain this answer?
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