Errors discovered in the Suspense Account

The Suspense Account is a temporary account used to record differences between the actual balance and the expected balance. In this case, the merchant's trial balance did not agree, and the difference was put into the Suspense Account. During the next trading period, the following errors were discovered:

1. Omission

An omission error occurs when a transaction is not recorded in the accounting system. For example, the merchant forgot to record a sale or a purchase. This error can cause the trial balance to be imbalanced, and the difference is recorded in the Suspense Account.

2. Error of Commission

An error of commission occurs when a transaction is recorded incorrectly. For example, the merchant may have recorded a sale as a purchase or vice versa. This error can cause the trial balance to be imbalanced, and the difference is recorded in the Suspense Account.

3. Error of Principle

An error of principle occurs when an accounting principle is not followed. For example, the merchant may have recorded a capital expenditure as revenue expenditure. This error can cause the trial balance to be imbalanced, and the difference is recorded in the Suspense Account.

4. Error of Original Entry

An error of original entry occurs when a transaction is recorded incorrectly in the journal or ledger. For example, the merchant may have recorded a sale of $500 as $50. This error can cause the trial balance to be imbalanced, and the difference is recorded in the Suspense Account.

5. Error of Reversal

An error of reversal occurs when a transaction is recorded in the opposite direction. For example, the merchant may have recorded a credit purchase as a credit sale. This error can cause the trial balance to be imbalanced, and the difference is recorded in the Suspense Account.

Conclusion

In conclusion, the Suspense Account is a temporary account used to record differences between the actual balance and the expected balance. Omission, error of commission, error of principle, error of original entry, and error of reversal are the common errors discovered in the Suspense Account. It is important for businesses to identify and correct these errors to ensure accurate financial reporting.

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