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JAMB Principles of Accounts 1994 Question 11

Question 11

Correction of Errors and Suspense Account

The suspense account is used to correct book-keeping errors where the

  1. A.amount involved is quite significant
  2. B.item involved is not material
  3. C.item involved is unknown
  4. D.error does not affect the agreement of the trial balance.
Show the answer and explanation

Answer: C (item involved is unknown)

Explanation

When the trial balance does not agree and the error cannot yet be located, the difference is put in a suspense account until the item is found and corrected.