Errors & The Suspense Account

Exam code: 7707

Written by: Ashika|Reviewed by: Caroline Carroll|Updated 2 July 2026

Errors which affect the trial balance

Which errors affect the trial balance?

There are some errors that are identified by the trial balance
The most common reasons for these types of errors are:
- Addition errors
- Posting errors
- Unequal posting errors
- Partial omission errors

Which are addition errors?

Addition errors occur when:
- A calculation error is made when balancing an account
- A numerical error is made when totalling the debits or credits in the trial balance
Example
- A business has two entries in the drawings account: $550 and $450
- The business incorrectly totals this account as $910

Which are posting errors?

Posting errors occur when both entries of a transaction are made on the same side of the accounts
- Both are entered as debits or both are entered as credits
Example
- A business pays $500 for rent
- The rent account is debited $500
- The bank account is debited $500
  - This should be a credit entry

Which are unequal posting errors?

Unequal posting errors occur when a transaction is entered into two accounts using different amounts
Transposition errors are common examples of unequal posting
- This is where the digits are entered in the wrong order
Example
- A business makes a credit sale of $52
- $52 is entered into the sales account
- $25 is entered into the trade receivables account
  - The digits have been switched around

Which are partial omission errors?

Partial omission errors occur when a transaction is only entered once into the ledger accounts
- The debit or credit entry is missing
Example
- A business takes $200 worth of goods for personal use
- They debit the drawings account
- But they forget to credit the purchases account

Suspense account

What is a suspense account?

A suspense account is used to correct errors when the totals in the trial balance are not equal
It is a temporary account
- It should be fully balanced once all the errors are corrected

How do I use a suspense account to correct errors?

STEP 1
Find the difference between the total debits and the total credits on the trial balance
STEP 2
Enter the difference into a suspense account on the side which has the lower total
- Call the entry “Difference on trial balance”
STEP 3
Make entries into the ledger accounts to correct the errors
- Label the entries as “Suspense account”
STEP 4
Balance these entries by making corresponding entries into the suspense account
- These entries will be on the opposite side to the entries that corrected the error
STEP 5
Close the suspense account once all the errors have been corrected
- The suspense account should automatically be balanced
  - If not, there are still errors

How do I find the difference in the totals on the trial balance?

If you have the trial balance, simply subtract the smaller total from the larger total
Sometimes you will not be given the trial balance
- You could be given a list of errors and asked to find the difference in the totals on the trial balance
Correct the errors using the suspense account
Balance the suspense account
- Label the balancing entry as “Difference on trial balance”
- The side that this entry appears on is the side which had the smaller total on the trial balance

Worked example

Jonas prepared a trial balance on 31 March 2024 and the totals were not equal. Credits were $590 higher than debits. The following errors were identified.

Credit purchases of $850 to Nicki had been correctly entered in the purchases account, but credited as $580 in Nicki’s account.
The sales account had been overstated by $740.
Discount allowed, $400, had been credited to the discount received account.
Vehicle expenses, $50, had been debited to the vehicles account.
A payment of $260 from a credit customer, Timmy, had been entered correctly into the cash book but had been debited to Timmy’s account.
Purchases returns, $160, had been entered correctly in the purchases ledger but had been omitted from the purchases returns account.

Prepare the suspense account to correct the errors. Start with the difference on the trial balance.

Answer:

The debit total was smaller on the trial balance, so put the difference on the debit side of the suspense account.

Deal with the errors one at a time.

Credit $270 to Nicki’s account ($850 - $580), then debit the suspense account.
Debit $740 to the sales account to reduce it, then credit the suspense account.
Discount allowed should have been debited to the discount allowed account. Debit $400 to the discount received account and debit $400 to the discount allowed account. Then credit the suspense account.
This is an error of principle that does not affect the balancing of the trial balance. Therefore, no entries are made into the suspense account to correct the error.
Timmy’s account should have been credited. Credit $260 to Timmy’s account twice, once to undo the incorrect posting and once to enter the correct posting. Then debit the suspense account.
Credit $160 to the purchases returns account. Then debit the suspense account.

Suspense Account

Date	Details	$	Date	Details	$
2024 Mar 31	Difference on trial balance	590	2024 Mar 31	Sales	740
	Nicki	270		Discount allowed	400
	Timmy	520		Discount received	400
	Purchases returns	160
		1 540			1 540

Errors which affect the trial balance

Errors which affect the trial balance

Which errors affect the trial balance?

Which are addition errors?

Which are posting errors?

Which are unequal posting errors?

Which are partial omission errors?

Suspense account

Suspense account

What is a suspense account?

How do I use a suspense account to correct errors?

How do I find the difference in the totals on the trial balance?

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