Multiple choice

Suspense account helps in

  1. ascertaining the true financial position

  2. preparation of final accounts on time

  3. ascertaining the correct net profit

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 The accountant is not in a position to locate the errors sometimes, and the Final Accounts ( Trading and Profit and Loss A/c and Balance Sheet)  are to be prepared, at the end of financial period in time. The final accounts can be prepared correctly, only when the Trial Balance tallies. Therefore the suspense account, is transferred to Trial Balance, so that the final accounts, are prepared on time. The errors are located later and the suspense account is removed.

Keep practicing — related questions