Please explain the concept of Error rectification in both Sectional Balancing Ledger
and Self Balancing Ledger system. The logic behind Debit and Credit, when to use suspense A/c ?
Thank you.
Savita (CA Final) (141 Points)
24 September 2010Please explain the concept of Error rectification in both Sectional Balancing Ledger
and Self Balancing Ledger system. The logic behind Debit and Credit, when to use suspense A/c ?
Thank you.
anurag
(student)
(30 Points)
Replied 28 September 2010
Hello Savita this is Anurag... Suspense account is used in self balancing system
1. When the nature of the error is not confirmed i.e the error in the corresponding debit or credit account is not confirmed .For Eg: Sales book under cast by Rs.1,000 (the corresponding effect may be due to error in posting of sales/debtor's A/c or any other error of commission or ommission)
2. After making any rectification in the general ledger the corresponding entry should also be corrected in the control accounts of Sales and bought ledger or vice versa...
3. The most easy way of rectification of the error under self balancing system is write the correct entry i.e (what it is suppose to be the entry for the initial recording of the transaction in the books under self balancing system, then go for the rectification entry)
This is the logic behind the rectification of errors using suspense account...
ALL THE BEST........
CAclubindia
