Suspense accounts and the correction of errors

Errors that do not affect the trial balance

Six classic types, and none of them creates a suspense account: omission (left out entirely), commission (right type of account, wrong account — a sale posted to the wrong customer), principle (wrong type of account — a van posted to motor expenses), original entry (wrong amount in both accounts), reversal (debit and credit the wrong way round), compensating (two errors of equal size cancelling out).

Errors that do

Anything that makes the two sides unequal: a one-sided entry, a different amount on each side, an addition mistake, or a balance omitted from the trial balance. The difference is parked in a suspense account until found.

How to clear a suspense account

For each error, ask what was recorded and what should have been recorded, then write the journal that turns one into the other. If only one side was wrong, the other side of the correcting journal is suspense. When all errors are corrected the suspense balance must be exactly zero — and that is the check.

Effect on profit

Only errors touching income or expense accounts change profit. A statement of corrected profit lists just those; errors between two balance-sheet accounts change the balance sheet but leave profit alone. Sorting the errors into these two piles before calculating saves most of the marks.