Theory question 104
Trial Balance4. Explain: (a) three errors that would affect the agreement of a trial balance; (b) a suspense account.
Show the model answer
Model answer
(a) Any three: single entry – only one side of a transaction is posted; casting errors – an account or day book total is overcast or undercast on one side; posting different amounts to the debit and credit (or transposition on one side only); a balance omitted from the trial balance or placed on the wrong side; wrong balancing of an account.
(b) A suspense account is a temporary account opened to hold the difference between the debit and credit totals of a trial balance so that it balances, until the errors are found and corrected through the journal.
Explanation
Only errors that upset the equality of debits and credits affect the trial balance.