Practice - When to Use a Suspense Account?
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Practice Questions
Test your understanding with targeted questions
What is a suspense account used for?
💡 Hint: Think about balancing accounts.
When should a suspense account be used?
💡 Hint: Recall when balances don't match.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary purpose of a suspense account?
💡 Hint: Focus on the nature of the account.
True or False: A suspense account should remain empty at all times.
💡 Hint: Think about the usage of closing balances.
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Challenge Problems
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A company's trial balance shows a difference of ₹3,000. After thorough checking, it turns out a cash sale was recorded incorrectly. Describe the steps to adjust the suspense account and what the journal entries would look like.
💡 Hint: Consider both the initial placement and the correction once the error is identified.
If a suspense account has a balance of ₹1,200 due to a misreported expense, outline how this affects the financial statements until cleared.
💡 Hint: Think about the impact on profit calculations and financial health representations.
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