In the FA1, FA2 and FFA/FA exams, any errors which must be identified and corrected will be realistic in terms of a computerised accounting system. For example, a single-sided journal entry without a corresponding debit/credit will not be examinable because a computerised system is unlikely to allow this but a single-sided journal entry which is posted with a suspense account as the corresponding debit/credit will be examinable.
A suspense account is created either by:
- the computerised accounting system automatically balancing a previously imbalanced manual journal entry, or
- the bookkeeper recognising an amount directly to the suspense account as part of a manual journal entry.
Below is a non-exhaustive list of reasons which may lead to the creation of a suspense account:
Errors of transposition (eg Dr Expenses $32, Cr Trade payables $23)
In this situation, the bookkeeper will either realise their mistake immediately and enter the amount correctly in the first place or, if they are not sure what the correct amount is, they may post the difference to a suspense account and then investigate.
Errors of posting to the same side of the double entry (eg Dr Purchases $50, Dr Trade payables $50)
In this situation, the bookkeeper is likely to either realise their mistake and post the correct journal entry immediately or to post the difference to a suspense account – perhaps being unsure as to whether a third account (eg sales tax) would also be required.
Errors of omission to one side of the double entry (eg Dr Expense $75, Cr - )
In this situation, the bookkeeper may be unsure of what the credit entry should be and so might post this entry to a suspense account before investigating what the correct account should be.