The suspense account is used to correct book-keeping error where the
amount involved is quite significant
item involved is not material
item involved is unknown
error does not affect the agreement of the trial balance
Explanation
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Here is an explanation
suspense account is a temporary resting place for an entry that will end up somewhere else once its final destination is determined. There are two reasons why a suspense account could be opened:
a bookkeeper is unsure where to post an item and enters it to a suspense account pending instructions
there is a difference in a trial balance and a suspense account is opened with the amount of the difference so that the trial balance agrees (pending the discovery and correction of the errors causing the difference). This is the only time an entry is made in the records without a corresponding entry elsewhere (apart from the correction of a trial balance error)
wich 1 sud we agree on nw, cos is like dea is confusion in it o though i agree wit option ''B''
Correct answer is C cos the error is unknown. until its detected and corrected, SUSPENSE will come in to cater for such unknown error temporarily or permanently.
The Question has been modified and thanks for your comments.
If the explanation is insufficient please refer to:
http://www.accaglobal.com/lk/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/suspense-accounts.html
for further reading on suspense account.
please am kind of confuse here, material in what aspect? i will go for A cos when a suspense account is prepared, it to identify the errors affecting the trial balance which are significant cos without such error been found, it need to questioning of the finally answer which as a qualified accountant you must be able to defend. If anyone has another explanation i will love to read it cos we are all learning here. Thank you
