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If an error is not detected in spite of all efforts and trial balance does not agree then what measure will be taken for the agreement of a trial balance
- a)Should opened a suspense account
- b)Should opened a compensation account
- c)Should opened a rectification account
- d)None
Correct answer is option 'A'. Can you explain this answer?
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If an error is not detected in spite of all efforts and trial balance ...
Answer:
**Explanation:**
When an error is not detected and the trial balance does not agree, a suspense account is opened to temporarily hold the difference between the debits and credits. This is done as a temporary solution until the error is identified and rectified.
**Reasons for opening a suspense account:**
1. **Temporary Solution:** Opening a suspense account allows the trial balance to balance temporarily. It serves as a placeholder for the difference between the debits and credits until the error is found and corrected.
2. **Identification of Error:** By opening a suspense account, it becomes clear that there is an error in the books. It prompts the accountants to investigate and locate the error that caused the disagreement in the trial balance.
3. **Maintaining Accuracy:** Opening a suspense account helps in maintaining accuracy in the accounting records. It avoids making arbitrary adjustments or assumptions to force the trial balance to balance, which could lead to further inaccuracies.
4. **Efficient Rectification:** Once the error is identified, the necessary rectification can be made directly to the suspense account, making the correction process more efficient.
5. **Disclosure of Errors:** By opening a suspense account, it ensures that the error is not hidden or concealed. It allows for transparency in the accounting process and ensures that errors are properly disclosed and rectified.
**Rectification Process:**
Once the error is identified, the necessary rectification entries are made to the suspense account. The error can be rectified by adjusting the wrongly recorded entries or by correcting any arithmetic mistakes. The suspense account is then closed by transferring the corrected amount to the appropriate accounts.
Overall, opening a suspense account is an effective measure to temporarily hold the difference in the trial balance, allowing for the identification and rectification of errors in a systematic and transparent manner.
**Explanation:**
When an error is not detected and the trial balance does not agree, a suspense account is opened to temporarily hold the difference between the debits and credits. This is done as a temporary solution until the error is identified and rectified.
**Reasons for opening a suspense account:**
1. **Temporary Solution:** Opening a suspense account allows the trial balance to balance temporarily. It serves as a placeholder for the difference between the debits and credits until the error is found and corrected.
2. **Identification of Error:** By opening a suspense account, it becomes clear that there is an error in the books. It prompts the accountants to investigate and locate the error that caused the disagreement in the trial balance.
3. **Maintaining Accuracy:** Opening a suspense account helps in maintaining accuracy in the accounting records. It avoids making arbitrary adjustments or assumptions to force the trial balance to balance, which could lead to further inaccuracies.
4. **Efficient Rectification:** Once the error is identified, the necessary rectification can be made directly to the suspense account, making the correction process more efficient.
5. **Disclosure of Errors:** By opening a suspense account, it ensures that the error is not hidden or concealed. It allows for transparency in the accounting process and ensures that errors are properly disclosed and rectified.
**Rectification Process:**
Once the error is identified, the necessary rectification entries are made to the suspense account. The error can be rectified by adjusting the wrongly recorded entries or by correcting any arithmetic mistakes. The suspense account is then closed by transferring the corrected amount to the appropriate accounts.
Overall, opening a suspense account is an effective measure to temporarily hold the difference in the trial balance, allowing for the identification and rectification of errors in a systematic and transparent manner.
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If an error is not detected in spite of all efforts and trial balance does not agree then what measure will be taken for the agreement of a trial balancea)Should opened a suspense accountb)Should opened a compensation accountc)Should opened a rectification accountd)NoneCorrect answer is option 'A'. Can you explain this answer?
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If an error is not detected in spite of all efforts and trial balance does not agree then what measure will be taken for the agreement of a trial balancea)Should opened a suspense accountb)Should opened a compensation accountc)Should opened a rectification accountd)NoneCorrect answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about If an error is not detected in spite of all efforts and trial balance does not agree then what measure will be taken for the agreement of a trial balancea)Should opened a suspense accountb)Should opened a compensation accountc)Should opened a rectification accountd)NoneCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If an error is not detected in spite of all efforts and trial balance does not agree then what measure will be taken for the agreement of a trial balancea)Should opened a suspense accountb)Should opened a compensation accountc)Should opened a rectification accountd)NoneCorrect answer is option 'A'. Can you explain this answer?.
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