suspense account

This query is : Resolved 

08 December 2008

respected sir,
please let me know the exact defference between profit and loss account and profit and loss suspense account.

Mani VGS (Expert)
08 December 2008

I hope you should have seen this question from CPT ICAI material "Partnership Accoutning" chapter:

Profit and Loss account will be prepared at the end of the year in order to ascertain the profit or loss from the business. Usually [generally] this will be prepared at the end of the year.

But when a partner is going to die, he will not die exactly on the date of balance sheet. If that be the case, it is not death. It is a planned murder :)

If the accounting period is 1.1.08 to 31.12.08, and if a partner dies on 26.2.08, then the legal representative of the deceased partner is eligible to received profit for the relevant period [from 1.1.08]. Such profit share will be given from profit and loss suspense account. Because on 26.2.08 or on the date of settlement say [4.5.08], we will not generally prepare Profit and loss account. Instead profit and loss suspense a/c is prepared and amount to the legal representative is paid from this balance.

At the end of the year, P & l suspense balance is transferred to Profit and Loss account.

Dear experts, if I am wrong, please correct me!!!

You need to be the querist or approved CAclub expert to take part in this query .

Click here to login now

Similar Resolved Queries :

close x
Download GST App    |    x