Trial balance, suspense account and error correction

Topic 9: Trial Balance, Suspense Account and Error Correction — 50 Hard MCQs

1. A trial balance has total debit balances of $184 600 and total credit balances of $181 900.

What is entered in the suspense account?

A $2700 debit
B $2700 credit
C $366 500 debit
D $366 500 credit

2. A trial balance has total debit balances of $92 400 and total credit balances of $96 100.

What is entered in the suspense account?

A $3700 debit
B $3700 credit
C $188 500 debit
D $188 500 credit

3. Which error will not affect the agreement of the trial balance?

A a sale of $400 credited to sales but not debited to trade receivables
B rent of $800 debited to repairs and credited to bank
C purchases of $900 debited to purchases as $90 and credited to payables as $900
D discount allowed of $60 credited to discount allowed and debited to receivables

4. Which error will affect the agreement of the trial balance?

A purchase of machinery recorded in purchases account
B sale of goods completely omitted
C cash received from customer debited to bank but not credited to receivables
D rent paid debited to rent instead of rates

5. Which error is an error of original entry?

A purchase invoice for $640 recorded in both accounts as $460
B rent paid debited to repairs
C sale entered only in sales account
D cash received entered on the wrong side of bank account

6. Which error is an error of commission?

A goods bought from A Khan posted to B Khan’s account
B purchase of machinery recorded as purchases
C rent paid recorded as repairs
D purchase invoice completely omitted

7. Which error is an error of principle?

A machinery bought recorded in purchases
B sale to Ali recorded in Ahmed’s account
C invoice for $760 entered as $670 in both accounts
D discount allowed entered in discount received

8. Which error is an error of complete reversal?

A cash sale completely omitted
B purchase of goods debited to machinery
C wages paid debited to bank and credited to wages
D sale invoice posted to the wrong customer

9. Which error is an error of omission?

A transaction entered on the wrong side of both accounts
B transaction completely left out of the books
C transaction entered in the wrong personal account
D transaction entered using the wrong amount in one account only

10. Which error is compensated by another error?

A two errors cancel each other’s effect on trial balance totals
B one transaction is completely omitted
C one item is entered in the wrong class of account
D debit and credit entries are both reversed

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

11. A sale of goods, $1200, was correctly entered in the sales journal but posted only to the sales account.

What correction is required?

A debit trade receivables $1200, credit suspense $1200
B debit suspense $1200, credit trade receivables $1200
C debit sales $1200, credit suspense $1200
D debit trade receivables $1200, credit sales $1200

12. A purchase of goods, $900, was correctly entered in the purchases journal but posted only to the supplier’s account.

What correction is required?

A debit purchases $900, credit suspense $900
B debit suspense $900, credit purchases $900
C debit supplier $900, credit suspense $900
D debit purchases $900, credit supplier $900

13. Rent paid by cheque, $650, was correctly credited to bank but debited to rent as $560.

What correction is required?

A debit rent $90, credit suspense $90
B debit suspense $90, credit rent $90
C debit rent $1210, credit suspense $1210
D debit suspense $1210, credit rent $1210

14. Discount allowed of $75 was debited correctly to discount allowed but credited to trade receivables as $57.

What correction is required?

A debit suspense $18, credit trade receivables $18
B debit trade receivables $18, credit suspense $18
C debit discount allowed $18, credit suspense $18
D debit suspense $132, credit trade receivables $132

15. Discount received of $120 was correctly debited to trade payables but credited to discount received as $102.

What correction is required?

A debit discount received $18, credit suspense $18
B debit suspense $18, credit discount received $18
C debit trade payables $18, credit suspense $18
D debit suspense $222, credit discount received $222

16. Cash received from a customer, $480, was debited to bank but no entry was made in the customer’s account.

What correction is required?

A debit suspense $480, credit trade receivables $480
B debit trade receivables $480, credit suspense $480
C debit bank $480, credit trade receivables $480
D debit suspense $960, credit trade receivables $960

17. Cash paid to a supplier, $700, was credited to bank but no entry was made in the supplier’s account.

What correction is required?

A debit trade payables $700, credit suspense $700
B debit suspense $700, credit trade payables $700
C debit trade receivables $700, credit suspense $700
D debit purchases $700, credit suspense $700

18. A cash sale of $360 was entered only in the cash account.

What correction is required?

A debit suspense $360, credit sales $360
B debit sales $360, credit suspense $360
C debit cash $360, credit sales $360
D debit suspense $720, credit sales $720

19. A cash purchase of goods, $520, was entered only in the cash account.

What correction is required?

A debit purchases $520, credit suspense $520
B debit suspense $520, credit purchases $520
C debit purchases $520, credit cash $520
D debit suspense $1040, credit purchases $1040

20. A credit sale of $840 was posted to the debit of the customer’s account but not posted to sales.

What correction is required?

A debit sales $840, credit suspense $840
B debit suspense $840, credit sales $840
C debit trade receivables $840, credit sales $840
D debit suspense $1680, credit sales $1680

21. A credit purchase of $760 was posted to the credit of the supplier’s account but not posted to purchases.

What correction is required?

A debit purchases $760, credit suspense $760
B debit suspense $760, credit purchases $760
C debit trade payables $760, credit purchases $760
D debit purchases $760, credit trade payables $760

22. A payment of $300 for stationery was correctly credited to bank but debited to stationery as $30.

What correction is required?

A debit stationery $270, credit suspense $270
B debit suspense $270, credit stationery $270
C debit stationery $330, credit suspense $330
D debit suspense $330, credit stationery $330

23. A receipt of $450 from a customer was correctly debited to bank but credited to the customer as $540.

What correction is required?

A debit suspense $90, credit trade receivables $90
B debit trade receivables $90, credit suspense $90
C debit bank $90, credit suspense $90
D debit suspense $990, credit trade receivables $990

24. A payment of $680 to a supplier was correctly credited to bank but debited to the supplier as $860.

What correction is required?

A debit suspense $180, credit trade payables $180
B debit trade payables $180, credit suspense $180
C debit bank $180, credit suspense $180
D debit suspense $1540, credit trade payables $1540

25. A purchase return of $430 was credited to purchases returns but no entry was made in the supplier’s account.

What correction is required?

A debit trade payables $430, credit suspense $430
B debit suspense $430, credit trade payables $430
C debit purchases returns $430, credit suspense $430
D debit trade receivables $430, credit suspense $430

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

26. A sales return of $510 was debited to sales returns but no entry was made in the customer’s account.

What correction is required?

A debit trade receivables $510, credit suspense $510
B debit suspense $510, credit trade receivables $510
C debit sales returns $510, credit suspense $510
D debit suspense $1020, credit trade receivables $1020

27. A purchase invoice for $1500 was entered in the purchases journal as $510 and posted to both accounts as $510.

What correction is required?

A debit purchases $990, credit trade payables $990
B debit suspense $990, credit purchases $990
C debit trade payables $990, credit purchases $990
D debit purchases $1500, credit trade payables $510

28. A sales invoice for $2400 was entered in the sales journal as $4200 and posted to both accounts as $4200.

What correction is required?

A debit sales $1800, credit trade receivables $1800
B debit trade receivables $1800, credit sales $1800
C debit suspense $1800, credit sales $1800
D debit sales $4200, credit trade receivables $2400

29. A purchase of machinery, $8000, was recorded as purchases.

What correction is required?

A debit machinery $8000, credit purchases $8000
B debit purchases $8000, credit machinery $8000
C debit machinery $8000, credit suspense $8000
D debit suspense $8000, credit purchases $8000

30. Repairs expense of $1200 was wrongly debited to machinery.

What correction is required?

A debit repairs $1200, credit machinery $1200
B debit machinery $1200, credit repairs $1200
C debit repairs $1200, credit suspense $1200
D debit suspense $1200, credit machinery $1200

31. A sale of goods, $950, was debited to sales and credited to trade receivables.

What correction is required?

A debit trade receivables $950, credit sales $950
B debit trade receivables $1900, credit sales $1900
C debit sales $1900, credit trade receivables $1900
D debit suspense $1900, credit sales $1900

32. A payment of rent, $400, was debited to bank and credited to rent.

What correction is required?

A debit rent $400, credit bank $400
B debit rent $800, credit bank $800
C debit bank $400, credit rent $400
D debit suspense $800, credit bank $800

33. Goods taken by the owner for personal use, $600, were debited to purchases and credited to drawings.

What correction is required?

A debit drawings $600, credit purchases $600
B debit drawings $1200, credit purchases $1200
C debit purchases $600, credit drawings $600
D debit suspense $1200, credit purchases $1200

34. Capital introduced of $5000 cash was debited to capital and credited to bank.

What correction is required?

A debit bank $5000, credit capital $5000
B debit bank $10 000, credit capital $10 000
C debit capital $5000, credit bank $5000
D debit suspense $10 000, credit capital $10 000

35. Drawings of cash, $900, were debited to bank and credited to drawings.

What correction is required?

A debit drawings $900, credit bank $900
B debit drawings $1800, credit bank $1800
C debit bank $900, credit drawings $900
D debit suspense $1800, credit bank $1800

36. A business finds that rent paid, $1200, was wrongly debited to insurance.

What is the effect on profit before correction?

A profit is overstated by $1200
B profit is understated by $1200
C profit is unaffected
D profit is overstated by $2400

37. A business finds that purchase of equipment, $7000, was wrongly recorded as purchases. Depreciation should have been charged at 10%.

What is the effect on profit before correction?

A profit understated by $6300
B profit overstated by $6300
C profit understated by $7000
D profit overstated by $700

38. A business finds that repairs expense, $3000, was wrongly recorded as machinery. Depreciation of 20% has been charged on it.

What is the effect on profit before correction?

A profit overstated by $2400
B profit understated by $2400
C profit overstated by $3000
D profit understated by $600

39. A business failed to record accrued wages of $1400.

What is the effect on profit and liabilities?

A profit overstated and liabilities understated
B profit understated and liabilities overstated
C profit overstated and assets understated
D profit understated and assets overstated

40. A business failed to record prepaid insurance of $800.

What is the effect on profit and assets?

A profit overstated and assets overstated
B profit understated and assets understated
C profit overstated and liabilities understated
D profit understated and liabilities overstated

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

41. A business failed to record income received in advance of $1500.

What is the effect?

A profit overstated and liabilities understated
B profit understated and liabilities overstated
C profit overstated and assets understated
D profit understated and assets overstated

42. A business failed to record accrued commission income of $700.

What is the effect?

A profit understated and assets understated
B profit overstated and liabilities understated
C profit understated and liabilities overstated
D profit overstated and assets overstated

43. A business failed to write off an irrecoverable debt of $900.

What is the effect?

A profit overstated and trade receivables overstated
B profit understated and trade receivables understated
C profit overstated and liabilities understated
D profit understated and liabilities overstated

44. A business failed to increase the allowance for irrecoverable debts by $650.

What is the effect?

A profit overstated and trade receivables overstated
B profit understated and trade receivables understated
C profit overstated and liabilities overstated
D profit understated and liabilities understated

45. A business failed to reduce the allowance for irrecoverable debts by $400.

What is the effect?

A profit overstated and trade receivables overstated
B profit understated and trade receivables understated
C profit overstated and trade receivables understated
D profit understated and trade receivables overstated

46. A suspense account has a debit balance of $750. Which error could have caused this?

A sales account overcast by $750
B purchases account undercast by $750
C rent expense debited as $750 instead of $1500, bank correctly credited
D discount received credited as $750 instead of $1500, payables correctly debited

47. A suspense account has a credit balance of $620. Which error could have caused this?

A purchases account undercast by $620
B sales account undercast by $620
C bank payment credited correctly but expense debit omitted
D discount allowed debit omitted

48. The debit side of the trial balance exceeds the credit side by $960. Which error could explain the difference?

A sales account undercast by $960
B purchases account undercast by $960
C rent paid debited to repairs
D credit sale completely omitted

49. The credit side of the trial balance exceeds the debit side by $840. Which error could explain the difference?

A purchases account undercast by $840
B sales account undercast by $840
C cash received debited to bank but not credited to receivables
D machinery purchase debited to purchases

50. A suspense account is cleared after correcting all errors.

What does this mean?

A all errors in the accounts have been found
B all errors affecting trial balance agreement have been corrected
C profit must now be correct
D no errors of principle can exist

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

1. B — $2700 credit

• Debit total = $184 600

• Credit total = $181 900

• Debits exceed credits by $2700.

• To balance, suspense account must be credited by $2700.

2. A — $3700 debit

• Debit total = $92 400

• Credit total = $96 100

• Credits exceed debits by $3700.

• To balance, suspense account must be debited by $3700.

3. No single correct answer — B and D both do not affect trial balance agreement

• B: rent debited to repairs and credited to bank still has equal debit and credit.

• D: discount allowed credited and receivables debited is wrong, but debit and credit are still equal.

• Both are errors that do not affect trial balance agreement.

• The MCQ needs correction.

4. C — cash received from customer debited to bank but not credited to receivables

• Only the debit entry was made.

• The credit entry is missing.

• This causes the trial balance not to agree.

5. A — purchase invoice for $640 recorded in both accounts as $460

• Error of original entry = original amount is wrong in both debit and credit accounts.

• Trial balance still agrees because both sides used the same wrong figure.

6. A — goods bought from A Khan posted to B Khan’s account

• Error of commission = entry made in the wrong personal account.

• Same class of account, wrong person.

7. A — machinery bought recorded in purchases

• Error of principle = wrong class of account.

• Machinery is capital expenditure.

• Purchases is revenue expenditure.

8. C — wages paid debited to bank and credited to wages

• Correct entry should be:

  • debit wages

  • credit bank

• It has been completely reversed.

9. B — transaction completely left out of the books

• Error of omission means the transaction is not recorded at all.

10. A — two errors cancel each other’s effect on trial balance totals

• Compensating errors cancel each other out.

• The trial balance may still agree even though errors exist.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

11. A — debit trade receivables $1200, credit suspense $1200

• Sales account was credited.

• Debit to trade receivables was missing.

• Correction:

  • debit trade receivables

  • credit suspense

12. A — debit purchases $900, credit suspense $900

• Supplier/payables account was credited.

• Purchases debit was missing.

• Correction:

  • debit purchases

  • credit suspense

13. A — debit rent $90, credit suspense $90

• Bank credit = $650 correct.

• Rent debit = $560, but should be $650.

• Debit short by $90.

• Correction:

  • debit rent $90

  • credit suspense $90

14. A — debit suspense $18, credit trade receivables $18

• Discount allowed debit = $75 correct.

• Trade receivables credit = $57, should be $75.

• Credit short by $18.

• Correction:

  • debit suspense $18

  • credit trade receivables $18

15. B — debit suspense $18, credit discount received $18

• Trade payables debit = $120 correct.

• Discount received credit = $102, should be $120.

• Credit short by $18.

• Correction:

  • debit suspense $18

  • credit discount received $18

16. A — debit suspense $480, credit trade receivables $480

• Bank was debited correctly.

• Trade receivables credit was missing.

• Correction:

  • debit suspense

  • credit trade receivables

17. A — debit trade payables $700, credit suspense $700

• Bank was credited correctly.

• Trade payables debit was missing.

• Correction:

  • debit trade payables

  • credit suspense

18. A — debit suspense $360, credit sales $360

• Cash was debited.

• Sales credit was missing.

• Correction:

  • debit suspense

  • credit sales

19. A — debit purchases $520, credit suspense $520

• Cash payment was entered.

• Purchases debit was missing.

• Correction:

  • debit purchases

  • credit suspense

20. B — debit suspense $840, credit sales $840

• Customer account was debited.

• Sales credit was missing.

• Correction:

  • debit suspense

  • credit sales

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

21. A — debit purchases $760, credit suspense $760

• Supplier account was credited.

• Purchases debit was missing.

• Correction:

  • debit purchases

  • credit suspense

22. A — debit stationery $270, credit suspense $270

• Bank credit = $300 correct.

• Stationery debit = $30, should be $300.

• Debit short = $270.

• Correction:

  • debit stationery $270

  • credit suspense $270

23. B — debit trade receivables $90, credit suspense $90

• Bank debit = $450 correct.

• Customer was credited $540 instead of $450.

• Trade receivables credit is too high by $90.

• Correction:

  • debit trade receivables $90

  • credit suspense $90

24. A — debit suspense $180, credit trade payables $180

• Bank credit = $680 correct.

• Supplier account was debited $860 instead of $680.

• Trade payables debit is too high by $180.

• Correction:

  • debit suspense $180

  • credit trade payables $180

25. A — debit trade payables $430, credit suspense $430

• Purchases returns was credited correctly.

• Supplier/payables debit was missing.

• Correction:

  • debit trade payables

  • credit suspense

26. B — debit suspense $510, credit trade receivables $510

• Sales returns was debited correctly.

• Customer/receivables credit was missing.

• Correction:

  • debit suspense

  • credit trade receivables

27. A — debit purchases $990, credit trade payables $990

• Correct invoice = $1500

• Recorded = $510

• Difference = $990

• Both accounts need increasing by $990.

• Correction:

  • debit purchases $990

  • credit trade payables $990

• No suspense account is needed because trial balance still agreed.

28. A — debit sales $1800, credit trade receivables $1800

• Correct invoice = $2400

• Recorded = $4200

• Overstated by $1800.

• Need reduce both sales and receivables.

• Correction:

  • debit sales $1800

  • credit trade receivables $1800

29. A — debit machinery $8000, credit purchases $8000

• Machinery is a non-current asset.

• Purchases is for goods for resale.

• Correction:

  • debit machinery

  • credit purchases

• No suspense needed because debit was made, just to the wrong account.

30. A — debit repairs $1200, credit machinery $1200

• Repairs should be revenue expenditure.

• Machinery was wrongly debited.

• Correction:

  • debit repairs

  • credit machinery

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

31. B — debit trade receivables $1900, credit sales $1900

• Correct entry should be:

  • debit trade receivables $950

  • credit sales $950

• Wrong entry was:

  • debit sales $950

  • credit trade receivables $950

• To reverse and correct, double the amount:

  • debit trade receivables $1900

  • credit sales $1900

32. B — debit rent $800, credit bank $800

• Correct entry:

  • debit rent $400

  • credit bank $400

• Wrong entry:

  • debit bank $400

  • credit rent $400

• Complete reversal correction = double amount:

  • debit rent $800

  • credit bank $800

33. B — debit drawings $1200, credit purchases $1200

• Correct entry:

  • debit drawings $600

  • credit purchases $600

• Wrong entry:

  • debit purchases $600

  • credit drawings $600

• Complete reversal correction = double amount:

  • debit drawings $1200

  • credit purchases $1200

34. B — debit bank $10 000, credit capital $10 000

• Correct entry:

  • debit bank $5000

  • credit capital $5000

• Wrong entry:

  • debit capital $5000

  • credit bank $5000

• Complete reversal correction = double amount:

  • debit bank $10 000

  • credit capital $10 000

35. B — debit drawings $1800, credit bank $1800

• Correct entry:

  • debit drawings $900

  • credit bank $900

• Wrong entry:

  • debit bank $900

  • credit drawings $900

• Complete reversal correction = double amount:

  • debit drawings $1800

  • credit bank $1800

36. C — profit is unaffected

• Rent and insurance are both expenses.

• One expense was debited instead of another.

• Total expenses are unchanged.

• Profit is unaffected.

37. A — profit understated by $6300

• Equipment should be capitalised.

• Correct expense should only be depreciation:

  • 10% × 7000 = $700

• Wrong expense charged = $7000 purchases.

• Expenses overstated = 7000 – 700 = $6300.

• Profit understated by $6300.

38. A — profit overstated by $2400

• Repairs should be fully expensed = $3000.

• Instead, it was capitalised and only depreciation was charged:

  • 20% × 3000 = $600

• Expense understated = 3000 – 600 = $2400.

• Profit overstated by $2400.

39. A — profit overstated and liabilities understated

• Accrued wages are unpaid expenses.

• If not recorded:

  • expenses understated

  • profit overstated

  • liabilities understated

40. B — profit understated and assets understated

• Prepaid insurance means too much expense has been charged.

• If not recorded:

  • expenses overstated

  • profit understated

  • current assets understated

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

41. A — profit overstated and liabilities understated

• Income received in advance is not yet earned.

• If not recorded:

  • income overstated

  • profit overstated

  • liabilities understated

42. A — profit understated and assets understated

• Accrued commission income has been earned but not received.

• If not recorded:

  • income understated

  • profit understated

  • assets understated

43. A — profit overstated and trade receivables overstated

• Irrecoverable debt should be written off.

• If not recorded:

  • expense understated

  • profit overstated

  • trade receivables overstated

44. A — profit overstated and trade receivables overstated

• Increasing allowance creates an expense.

• If increase is not recorded:

  • expense understated

  • profit overstated

  • allowance understated

  • net trade receivables overstated

45. B — profit understated and trade receivables understated

• Reducing allowance increases profit.

• If reduction is not recorded:

  • allowance remains too high

  • net trade receivables understated

  • profit understated

46. No single correct answer — A, B and C could all cause a debit suspense balance

• Debit suspense balance means credits exceed debits, often because a debit is missing/too low or a credit is too high.

• A: sales overcast = credit too high.

• B: purchases undercast = debit too low.

• C: rent debited too low = debit too low.

• D would cause the opposite because discount received credit is too low.

• The MCQ needs correction.

47. B — sales account undercast by $620

• Suspense account has a credit balance when debits exceed credits.

• Sales undercast means credit side is too low.

• This causes debit totals to exceed credit totals.

• So suspense account is credited.

48. A — sales account undercast by $960

• Debit side exceeds credit side.

• Sales is a credit account.

• If sales is undercast, credits are too low.

• This explains why debits exceed credits.

49. A — purchases account undercast by $840

• Credit side exceeds debit side.

• Purchases is a debit account.

• If purchases is undercast, debits are too low.

• This explains why credits exceed debits.

50. B — all errors affecting trial balance agreement have been corrected

• Clearing suspense only proves that trial balance disagreement has been fixed.

• Errors of omission, principle, commission, original entry and compensating errors may still exist.

• So no, clearing suspense does not mean the accounts are perfect. That would be too easy; Cambridge would never be that generous.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.