What is Suspense Account? Video Lecture | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

next let us come to something called a
suspense what is a suspense about a
trial balance is supposed to agree if
the debit side on the credit side do not
agree we try and locate the errors we go
back to the books of account we look at
the posting we look at the totally and
try to look at the errors but sometimes
it becomes sometimes it may be difficult
to find the end they may not be enough
time to do so it becomes necessary to
move on and prepare our final accounts
what we do in that case is that this
difference in the trial balance is put
in what is called a suspense account so
what is a suspense account it is simply
a temporary account it is a temporary
account suppose we take a trial balance
and we have some balances that say cash
of one we have banker to look and let us
say we have capital of freedom and we
have some rent expense of twenty pounds
that's a suppose when we total these
this we see we have a total here of
three lakh twenty thousand but here we
have a total of three so there is a
difference of twenty thousand we need to
bring 20,000 here we have to bring
20,000 here only then we can get this
balance and eat only then we can get the
trial and this twenty thousand we put
temporarily in an account called
suspense account what is a suspense
account it is a temporary account does
it have a debit balance does it have a
credit balance it could have a debit
balance it could have
credit balance depending on which side
is short so in this particular case the
debit total debit balance total was
three like 20 but the credit side is
only three lakh
therefore the credit side is short it
means twenty thousand you will credit to
suspense account
temporary account created only to tally
the trial balance then freely account
created only to Danny the drug that's
what is closing stock we do not have an
account called
closing stock ledger account does not
have a closing stock we have purchases
goods are purchased they have remained
in our stock good switch of purchase is
not sold that is called stock but we
don't have a separate account when we
purchase goods we say purchase account
debit to cash or purchase account debit
to creditors when we sell goods what do
we say we say cash account debit to
sales or we say debtor account debit to
six so we do not have our closing stock
but at the end of the year at the end of
the year we need to physically count our
stock and see how much of goods we
purchased and were not able to sell
during the year how much goods we
purchased and were not able to sell the
ring ring when we physically count this
talk physically count this stock and we
know say out of a total purchase of two
lakh we have 15,000 15,000 stock life
which was not sold
you remember our definition of an
expense and in essence we said whenever
we spend money the benefits of which we
get also in neck that in the next years
future years they are called essence
purchases are called expenses because we
intend to sell these goods in the
current year and get the benefit in the
currently but some part of this verse
Jesus in our example let us say
purchases we have two lakh closing stock
we have let us say fifteen thousand so
what has happened we purchase two light
goods we sold one lakh eighty five
thousand worth of goods for to landfill
next 50 for free like whatever but we've
managed to sell one lakh eighty five
thousand and we were not able to sell
fifteen thousand in the current year so
the benefit of this fifteen thousand is
not received in the current year
therefore it should not be a part of our
expense so we remove this from expense
and we transfer into an asset account so
sometimes when we count the stock the
accountant may pass an entry called
closing stock account debits closing
stock account debit to purchases to
purchases what happens as a result of
passing this entry
what is closing stock it is an essence
what is purchases purchases is actually
an expense when we credit purchase we
are reducing purchases when expense is
being reduced we credit the other so now
if you look at the Jesus we had two lakh
but now we have reduced purchases by
fifteen thousand we therefore now have
purchases of only one like eighty five
thousand this is correct because we
managed to sell only these items during
the current so if usually we do not see
closing stock in a trial balance if we
see closing stock balance in the trial
balance it means that the accountant has
physically come to the storm physically
counted the stock and in
this in the right balance by by passing
an entry cannot just included because
our double entry will not agree it will
not agree we cannot just put closing
stop it to pass an entry what is the
entry the accountant phone has passed
closing stock account debit to purchases
and what is closing stock it is an
essence the moment purchases was
credited the purchase balance will come
now so we reviews purchase expense and
increase and set increase closing stock
assets otherwise otherwise closing stock
is counted it is an item which appears
after the trial balance it is therefore
information and adjustments are made
when we prepare the final accounts and
justments are made when we prepare the