9.5 SUSPENSE ACCOUNT AND RECTIFICATION
You have learnt the Mthod of rectifying the ertors. This method is used for rectifying the errors located before preparing the final accounts. After the corrections have been made, a revised Trial Balance is prepared which should normally try. But, if it does not tally, it means thdre are stillsome errors whikh have not ken detected. As considerable time and effort have already been spent in locating and receifying the errors, it may not be possible to wait any longer bemuse it wgl delay the preparation of final accounts. Hence, in such.a situation the asud practice L to place the difference to Suspense account and taliy the Trial Bdance for the the being. if the total of the debit column in the Trial Balance is morethan the total of its credit column total, the difference is placed to the credit of Suspense Account and the Trial Balance will tally. Similarly, if the credit column total is more than the debit column total the difference is placed to the debit of Suspense Account. The Suspense Account thus created is shown in the Balance Sheet and is carried forward to the next year. Note that the Suspense Account is not the result of any transaction, It merely represents the net effect of errors which still remain undetected. Therefore, during the next accounting year, after tlme errors: are located and rectified, the Suspense Account will1 get closed. Let us now understand how arrors will be corrected in the following year. As for the two-sided errors, there is no change in the method of rectification. These errors do not affect the agreement of Trial Balance and hence do no: involve the Suspense Accuunt. %hey are rectified by aneatis of the journal entries as usual. mis is not the case in respect of one-sided errors. When one-sided errors were to be corrected before preparing the Trial Balance we did it by writing an appropriate note in the concerned account. But, when they are to be corrected during the next year i.e., after Suspense Account has been created, the rectification will be through an appropriate journal entry. The one-sided error usually affects only one account. So to pass a journal entry for rectification of such error, we shall now take Suspense Acccsunt as the otlier account involved. For example, Pas. 580 received from Shyam were posted to his account as Rs. 850. It means Shyam's Account is to be debited with Ms. 270. You can now pass the' following journal entry to rectify this error.
With the posting of the two rectification entries the Suspense Account is closed. Note that the opening balance in Suspense Account simply shows the net effect of these errors. Sometimes, the balance of Suspense Account is not given. In that case it cam ' worked out after completing the posting of the rectification entries.
Suppose in the above example the amount with which the Suspense Account was ' opened was not given. Leave the first line blank on both the debit and credit sides of the Suspense Account and post the rectification entries. The difference between the totals of the two sides will be considered as the balance with which the Suspense Account was opened. This is based on the assumption that there are no more errors remaining undetected
Look at illustrations 3 and 4 and study how erros are rectified when Suspense Account is in existence.
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