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SSC Financial and Cost Accounting P-1 QUESTION #6077
Question 1

A trial balance failed to balance, and a suspense account was created. The following errors were found:

  1. Carriage outwards debit balance of $450 was recorded as $540
  2. Purchases returns journal was overcast by $100
  3. A $50 cheque from Alan Green was credited to Brian Green
  4. Rent received of $350 was debited to the rent paid account

What was the initial balance of the suspense account?

  • Credit $690✔️
  • Credit $740
  • Debit $690
  • Debit $740
Correct Answer Explanation

1. Carriage Out: Debit side too high by $90 (Correction: Credit Suspense $90).
2. Purchases Returns: Credit side (returns) too high by $100 (Correction: Debit Suspense $100).
3. Wrong Person: No effect on Suspense (Debit/Credit match).
4. Rent: Income ($350 Cr) put in Expense ($350 Dr). Total error is $700 on debit side (Correction: Credit Suspense $700).
Net correction: $90 (Cr) - $100 (Dr) + $700 (Cr) = $690 Credit. To clear this, the opening balance must have been $690 Credit.