Trial Balance, Suspense Accounts and Correction of Errors
The trial balance is a list of ledger balances at a date, used to check that total debits equal total credits. It is not proof that the ledger is free from error. Errors that leave the trial balance balanced include errors of omission, commission, principle, original entry, reversal and compensating errors. Errors that cause a difference include one-sided entries, addition errors, transposition errors and posting to the wrong side. A suspense account holds the difference until corrections are made.
Worked example
The sales day book total was €5,000, but the sales account was posted as €4,500. Receivables were posted correctly at €5,000. Debits exceed credits by €500, so a suspense account with a credit balance of €500 is opened. The correction is: Dr Suspense €500; Cr Sales €500. The suspense account then clears.
An error of principle, such as debiting motor repairs to the motor vehicles asset account, does not affect the trial balance; it is corrected by Dr Motor Repairs, Cr Motor Vehicles.
Traps
Claiming the trial balance proves accuracy; using suspense for errors that do not affect the trial balance; correcting the wrong side; and failing to state the suspense balance direction. In corrections, always identify whether the original entry was one-sided or both-sided before writing the journal.