Suspense A/c- where to show in the Balance Sheet.

Why debit balance of suspense A/c is shown on the asset side and credit balance on the liabilities side?

asked Oct 17, 2014 in Rectification of Errors by dalmia.swati (15 points) 17,596 views

1 Answer

0 votes
If debit side of trial balance is short, then amount is placed on the debit side of trial balance and similarly if credit side of trial balance is short then that amount is placed at the credit of suspense account.  If accountant is not able to find out the mistake and he has to finanalise the accounts, he will have to place the balance in the suspense account in the balance sheet.  If the balance in the suspense account is a debit balance, then it will go to the asset side because it is a debit balance. All the assets have debit balance, though the nature of the amount laying at the debit side of suspense account is not known, it is being treated as an asset/or deferred revenue expenditure.  Similarly credit balance is placed on liabilities side because all liabilities have credit balance and you have to place the credit balance in suspense account there only.  You don't have any other option.
answered Oct 17, 2014 by jbsclasses (3,971 points)