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The accountant tallies his trial balance by putting the difference on shorter side as
- a)Compensating account
- b)Suspense account
- c)Credit account
- d)Debit account
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
The accountant tallies his trial balance by putting the difference on ...
The accountant tallies his trial balance by putting the difference on the shorter side as a suspense account. Here's a detailed explanation:
What is a trial balance?
- A trial balance is a statement that lists all the ledger accounts and their balances to ensure that the debits and credits are equal.
- It is prepared before the financial statements are generated.
Why is the trial balance tallied?
- The primary purpose of tallying the trial balance is to identify any errors in the accounting records.
- If the debits and credits do not match, it indicates that there is an error in the ledger accounts.
What is a suspense account?
- A suspense account is a temporary account used to temporarily hold the difference between the debit and credit sides of the trial balance.
- It is created when the trial balance does not tally.
How is the suspense account used?
- The difference between the debit and credit sides of the trial balance is transferred to the suspense account.
- The suspense account acts as a placeholder for the difference until the error is identified and corrected.
- Once the error is rectified, the suspense account balance is adjusted accordingly.
Why is the difference placed on the shorter side?
- Placing the difference on the shorter side of the trial balance simplifies the identification of the error.
- It helps the accountant quickly determine which side of the ledger contains the mistake.
- By placing the difference on the shorter side, the accountant can focus on that side to locate the error more efficiently.
Therefore, in the given scenario, the accountant tallies his trial balance by putting the difference on the shorter side as a suspense account (Option B).
Most Upvoted Answer
The accountant tallies his trial balance by putting the difference on ...
Suspense account is the account in which the amount being the difference in trial balance is temporarily placed. The difference is placed in suspense account so that final accounts are prepared without delay. As a result of this trial balance will appear to agree.
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The accountant tallies his trial balance by putting the difference on shorter side asa)Compensating accountb)Suspense accountc)Credit accountd)Debit accountCorrect answer is option 'B'. Can you explain this answer?
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