Suspense account is simple you just have to follow a principle. For every correction you make u put that in the opposite side in the suspense acc. For example if sales is undercasted by 100. You correct this error by crediting 100 in sales acc. This goes in debit side of the suspense
Suspense account is simple you just have to follow a principle. For every correction you make u put that in the opposite side in the suspense acc. For example if sales is undercasted by 100. You correct this error by crediting 100 in sales acc. This goes in debit side of the suspense
Right i think people get confused with the whole accounting system thing 1) source document - evidence of accounting information e.g. invoice 2) books of original entry - gathering and sorting accounting information e.g. sales day book, journal, cash book 3) ledger accounts - items "posted" to record the dual aspect of the transaction e.g. sales ledger, general ledger, purchases ledger 4) trial balance - arithmetic checking of double entry book keeping, a summary of the balances of all the accounts at the end of the accounting period 5) financial statements - statement measuring profit/loss, assets liabilities and capital, income statements and balance sheets
So those are the steps in the accounting system now you know exactly what point you're at - the ledger accounts The sales ledger contains all the accounts of receivables - people who owe money to the business The purchases ledger contains all the accounts of payables - people who the business owes money to The general ledger contains other accounts like the sales account and the purchases account. DON'T GET MIXED UP BETWEEN PURCHASES/SALES LEDGER AND PURCHASES/SALES ACCOUNTS
So to post entries into the sales and general ledgers you need to have information from the sales day book. The sales day book has the details of the sale (the names) and the amount. All the names in the sales day book each have a separate account in the sales LEDGER (remember the sales ledger contains all receivables accounts), so you take the information for each receivable in the sales day book and put it in each account on the DR side, of the sales LEDGER. Now obviously this has to be a double entry, the other account affected by sales is the sales ACCOUNT. The sales ACCOUNT is in the GENERAL LEDGER. The sales account contains the totals of all receivables. So you total it up from the sales DAY BOOK and enter in the total figure in the GENERAL LEDGER on the CR side. At the end you will notice that all of the DR entries of all the accounts in the Sales Ledger match up to the total figure in the CR side of the General Ledger.
The same process is with the Purchases Ledger but obviously DR and CR is swapped. I basically explained what the diagram was showing...