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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...
As it is known from its name 'suspense' means if any diff is in the trial balance it will be transferred to suspense account for compensate the error
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Difference of totals of both debit and credit side of trial balance is...
Explanation:
Suspense Account:
- When the totals of both debit and credit sides of the trial balance do not match, it indicates an error in the accounting records.
- The difference between the two sides is transferred to a temporary account known as the suspense account.
- The suspense account helps in balancing the trial balance temporarily until the errors are identified and rectified.
- Once the errors are corrected, the balance in the suspense account is transferred to the appropriate accounts.
- It acts as a placeholder for errors that need to be investigated and resolved.
Reason for transferring to Suspense Account:
- The difference between the debit and credit sides of the trial balance could be due to various reasons such as posting errors, omission of entries, incorrect calculations, etc.
- Transferring the difference to the suspense account allows the accountants to continue with the accounting process without waiting for the errors to be rectified immediately.
Final Resolution:
- The suspense account is not a permanent account and should be cleared once the errors are identified and rectified.
- It is important to investigate and correct the errors as soon as possible to ensure the accuracy of the financial statements.
- Once the errors are resolved, the balance in the suspense account is transferred to the appropriate accounts, and the trial balance is balanced.
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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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