Acca financial Accounting (FA) Study Text ac ca (FA)

Errors where the trial balance does not balance 

If the trial balance does not balance, there will be one or more errors posting 

into the ledger accounts. This will distort the information presented in the 

statement of financial position and statement of profit or loss. 

Consider the example of accounting for a cash sale of $1,000 with the following 

accounting entry made in the ledgers: 

Debit Cash account $1,000 with no credit entry made. 

An unequal value of debits and credits has been posted into the ledgers, and 

the trial balance will not agree, which will require creation and clearance of a 

suspense account in due course. 

Initially, sales revenue and therefore profit for the year has been understated. 

A suspense account will be created with a credit balance of $1,000. 

In this example, the net effect is that sales revenue and profit for the year in the 

statement of profit or loss has been understated by $1,000. In the statement of 

financial position, the suspense account with a credit balance has been created 

and will be cleared by a journal adjustment as follows: 

Debit Suspense account  $1,000 

Credit Sales revenue 

$1,000 

 

 

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