Chapter 13: Suspense Accounts and Errors

Question 1

Name and define the six errors that are detected by the trial balance and why they are detected.

Answer 1

1. Single entry - only one side of the double entry has been made

2. Casting entry - a ledger account has been added up incorrectly

3. Transposition entry - an amount or balance has been incorrectly recorded

4. Extraction entry - a ledger account balance has been recorded incorrectly on the trial balance

5. Omission entry - a ledger account balance is omitted from the trial balance

6. Two entries on one side - a transaction is entered as a debit or credit in two accounts

These errors are detected by the trial balance as the debits don’t equal the credits

Question 2

Name and define the six errors that are NOT detected by the trial balance and why they aren’t detected.

Answer 2

1. Error of original entry - a wrong figure is entered as both the debit and credit

2. Compensating error - two coincidental errors that cancel each other out

3. Error of omission - an entire double entry is omitted from the accounts

4. Error of commission - one side of a double entry has been made in the wrong account by the right type of account

5. Error of principle - one side of a double entry has been made in the wrong type of account

6. Reversal of entries - entries made in the wrong sides of the accounts

These errors aren’t detected by the trial balance because the debits still equal the credits

Question 3

What is the purpose of a suspense account?

Answer 3

The suspense account is used to balance the trial balance when the other side of an entry is unknown or there is an error to be investigated.