What is a suspense account? Is it necessary that is suspense account will balance off after rectification of the errors detected by the accountant? If not, then what happens to the balance still remaining in suspense account?

What is a suspense account? Is it necessary that is suspense account will balance off after rectification of the errors detected by the accountant? If not, then what happens to the balance still remaining in suspense account?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Which of the following errors will not affect the Trial balance? a. Wrong balancing of an account b.…

A: A trial balance's main function is to confirm that the entries in a firm's accounting system are…

Q: The purpose of testing the quality of debits and credits is to find errors recorded in the amounts.…

A: The purpose of testing the quality of debits and credits in accounting is to ensure that all…

Q: If an accountant mistakenly uses the General journal to record a payment of cash for a bill that is…

A: The general journal is the book in which raw business transactions are recorded.The first book in…

Q: Which of the following statements is not correct regarding combined statement of financial position…

A: The combined statement of financial position errors and income statement errors effects both the…

Q: All bad debts balances should be removed from accounts receivable balances when they are determined…

A: Accounts receivables can be defined as the payment which is yet to be received by the business in…

Q: Which statement is false? a. The amount of Accounts Receivable pledged should be excluded from…

A: Accounts receivables:-Accounts receivables includes the balance which is due to firm on the goods…

Q: If the two totals of a trial balance are equal, does it mean that there are no errors in the…

A: The trial balance reflects all the journal entries made in the general ledger during the accounting…

Q: If the two totals of a trial balance are equal, does this mean that there are no errors in the…

A: If the total debits equal the total credits, the trial balance is considered to be balanced and…

Q: Choose the correct and explain. The following statements pertain to presentation and valuation of…

A: SOLUTION EXPLANATION- CUSTOMER ACCOUNT RECEIVABLE IS OFFSET ACCOUNT THAT CONTRA WITH ACCOUNTS WITH…

Q: What are the impacts on your financial statement if you account the transactions not accurately

A: Financial Reporting refers to the recording of the financial transactions of a company for a desired…

Q: True or False: You can dispute an incorrect item on your credit report. True False

A: If there is an error in your credit report one should immediately takes steps to rectify it because…

Q: f an accountant mistakenly uses the General journal to record a payment of cash for a bill that is…

Q: How do you think the miss statement of fines will impact the important statement and balance sheet.

A: Given: The impact on income statement and balance sheet due to misstatements of funds.

Q: What is the purpose of the accounting?

A: Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions…

Q: EITHER TRUE OR FALSE. Describe why the assertion is incorrect if it is in fact incorrect. 1. Cash…

A: Cash refers to the amount of monetary value that is available in physical form in the hand of an…

Q: TRUE OR FALSE? Allowance for doubtful accounts will never have a debit balance.

A: Allowance for doubtful accounts is maintained for making provision for those where the debtors are…

Q: If the total debit balance equals the total credit balance on the trial balance, the accounting…

A: Accounting records may contain many types of errors. Some of them are posting mistakes, compensating…

Q: A transaction is not recorded by the accountant either wholly or partially in the books of accounts…

A: There are various errors that an accountant can commit while recording or posting financial…

Q: What do you know about contingent fees? In what kind of situation contingent fees happen? Please…

A: Contingent fees: The obligation to pay the fee arises when the results of the suit are in favour of…

Q: The notes receivable is debited by the bookkeeper instead of accounts receivable. What is the effect…

A: The assets have the debit balance and liabilities have the credit balance. Every transaction in the…

Q: 2. A check was dishonored due to material alteration. Creditor filed an action against drawee bank…

A: Answer: There can be various reasons for dishonoring of check.

Q: If in doubt about a credit problem, request written verification. O True O False

A: A credit problem refers to any issue or negative item that appears on a person's credit report and…

Q: What necessary steps should be taken by the bank if they classify an account as unsatisfactory?

A: Generally in the following cases bank classify particular account as unsatisfactory account: 1.When…

Q: he collection of customer’s account is credited to accounts payable. What is the effect of the error…

A: Answer) The correct Option is (D) No Effect Justifications: If collection from customer is credited…

Q: Debit

A: Lost or stolen debit or credit both can cause problems. However the problem is more with the debit…

Q: In methods of estimating doubtful accounts, how does income statements approaches differ from…

A: Income Statement Approach: under this approach, the estimated amount of bad debts expense is…

Q: Any time management makes an estimate, there is the risk of earnings management or fraud. Accounting…

A: Earning Management and Bad debts Earning management is the important department in every company. In…

Q: A basic difference between loss contingencies and “real”liabilities is: a. Liabilities stem from…

A: Contingency is a liability that may arise in the future while the real liability has already…

Q: Why do you think the loan officer suspected that the accounts had not been adjusted prior to the…

A: 1. Rule of Adjustments - .In an accrual basis of accounting all Income and Expenses incurred during…

Q: The updating of accounts when financial statements are prepared is called the adjusting process.…

A: Financial Statements are prepared at the end of the period to calculate the gains/losses and the…

Q: adjusting some transactions before Final Accounts are prepared?

A: The final accounts are prepared after making adjustments. Adjustments are very much required for the…

Q: ous period’s financial statements are called?

A: It is common to occur errors in the financial statements, but whenever it is found that errors have…

Q: Is it still necessary to record a transaction if it has no net effect on the accounting equation?…

A: Accounting equation says that total assets in the business must always be equal to total liabilities…

Q: The accountant for Kerns company mistakenly posted an expense amount as an asset in the general…

A: The financial statement refers to the accounting records that help us to know the financial position…

Q: To gather audit evidence related to accounts receivable, the client should mail the confirmation…

A: Auditor: An auditor is a person or a group of people who is responsible for conducting an audit of…

Q: Why is it important to review your checking account statement? What fees might this help you avoid?

A: Answer:- Account statement :- An account statement is a recurring list of transactions with a start…

Q: A contra account will not be listed immediately after its related account. O be potentially…

A: A contra account is the type of account that has balance that is opposite of the normal balance for…

Q: Please answer with reason for all why the option is correct and why the other options are incorrect…

A: Accounting errors can occur for various reasons, and they can have significant implications for the…

Q: est of details of transactions involves testing the transactions which give rise to the ending…

A: Solution Concept Test of details Test of details is a method used by auditor to verify…

Q: Why does the Bad Debts Expense account usually not have the same adjusted balance as the Allowance…

A: The amount which is due or receivable from another party for payment is known as receivable, it…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

I. Using the following table, indicate the effect of the following errors of omission on the financial statement classifications listed. If as a result of the omission a classification is overstated, place a (+) in the appropriate space. An understatement is to be indicated by a (-). If the omission has no effect on the classification, place a (0) in the appropriate cell. . a. Payment for repairs erroneously debited to Building account. b. Recorded collection of an account receivable by debiting Cash and crediting revenue асcount. c. Depreciation for the month was omitted. d. Recorded twice an acquisition of office equipment on account. e. Rendered services for cash but made no record of the transaction. Effect of Omission Classification a b. e Revenues Expenses Total Assets Total Liabilities Owner's Equity
What do the terms 'debit' and 'credit' mean from an accounting perspective? What are the two primary rules of debits and credits? How do these impact the various types of accounts (assets, liabilities, expenses, revenues, distributions to owners, and equity)? How do they help ensure that an illogical journal entry cannot be made? Provide at least one example of an illogical entry. Why would this be illogical?
Which of the following is the postclosing trial balance not designed to verify? Multiple Choice that the expense accounts have zero balances that the drawing accounts have zero balances that the capital accounts have zero balances that total debits equal total credits
How should correction of errors be reported in the financialstatements?
If the two totals in a trial balance are equal, does that automatically mean there are no errors in the accounting cycle? Why or why not?
For each of the following situations, indicate whether itrepresents an accounting error and explain why it is or isnot an error. Also state whether a trial balance would indicate that an error exists for each situation.d. The debit side of a journal entry was recorded in theaccounts, but the credit side was not.
The adjusting entry of unearned service revenue will decrease the liabilities True False
Using evidence from the real world, explain whether a current account deficitmight be seen as a problem?
How might HR apply the accounting principle of auditing to uncover financial mismanagement on an employee's expense reports?