Accounting Chapter VI: Suspense Accounts

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What should be done with any outstanding balances at the end of the preceding half-year?

They should be adjusted to revenue working expenses or miscellaneous receipts. (correct)

They should be transferred to a new account.

They should be ignored.

They should be reported to higher management.

Which of the following is NOT a requirement for the scrutiny of miscellaneous deposits?

Sums received as security for agreements must be included.

No debit items should appear.

Current items relating to agreements must be verified.

All items must relate to completed works. (correct)

What is indicated about the deposits from Branch Line companies?

They should be recorded under general deposits.

They can include debit balances if justified.

They need to be accurately accounted for under their respective heads. (correct)

They must not have any associated charges.

What is the purpose of the internal check on balances of loans and advances?

To furnish the required certificate to the Accounts Officer. Signup and view all the answers

Which type of sums should be scrutinised to ensure they rightly belong to the miscellaneous deposits account?

Sums received for work done on behalf of outside entities. Signup and view all the answers

What is the primary purpose of using suspense accounts?

To record transactions awaiting clarification or adjustment Signup and view all the answers

Which of the following is NOT a type of transaction recorded in suspense accounts?

Final sales of inventory Signup and view all the answers

Suspense accounts should be used to accommodate a transaction temporarily when:

Detailed particulars or allocations are unknown Signup and view all the answers

Why should the use of suspense heads for provisional adjustment be avoided?

It prevents accurate final reporting Signup and view all the answers

Which accounts are typically treated as suspense heads of account?

Materials held in stock and sundry debtors/creditors Signup and view all the answers

What is the significance of suspense accounts in the context of commercial and government systems of accounting?

They serve as a link for accrued earnings and expenses Signup and view all the answers

When should suspense accounts be cleared?

Once all transactions are finalized with parties involved Signup and view all the answers

Which of the following must be true about computerized store ledgers?

They are required to display the amount at debit of stores. Signup and view all the answers

What is a stipulation regarding the pricing of articles in computerized stores?

Prices should comply with para 210-S and account for depreciation. Signup and view all the answers

What should be regularly reviewed to avoid overstocks?

Exception Reports regarding overstocks and inactive items. Signup and view all the answers

In terms of purchases, what must be ensured regarding credit items?

They must be current and correspond to unpaid bills for supplies. Signup and view all the answers

What condition must all debit items meet?

They must be current and supported by sufficient documentary evidence. Signup and view all the answers

What is an acceptable scenario for credit items in the sales record?

They can exist in cases of cash sales or auction sales. Signup and view all the answers

What should be confirmed about the items before proceeding in the workshop manufacture suspense?

Items must be current and undertaken with a proper work order. Signup and view all the answers

What should happen with small value balances arising from rounding off rates?

They should be adjusted accordingly. Signup and view all the answers

Which of the following is not a requirement for the details of the workshop manufacture suspense?

Include credit items for balancing. Signup and view all the answers

What must be true of sales made in an organization?

Competent authority must approve all sales. Signup and view all the answers

What should happen to advance payments made under contract for purchase of stores?

They must be carried as miscellaneous advances if not against shipping documents. Signup and view all the answers

What must be verified if jobs are undertaken for outsiders?

That estimates of costs are approved by an authorized party. Signup and view all the answers

In managing miscellaneous advances, which is a correct statement?

All items must be recoverable and current. Signup and view all the answers

What is a requirement for item entries in computerized store ledgers?

Items should include both quantities and values. Signup and view all the answers

What is a key step to ensure no inefficient balances in workshop manufacture?

Periodical adjustments must be carried out regularly. Signup and view all the answers

What must be noted if any credit items do exist in the balances?

They should be adjusted immediately. Signup and view all the answers

What is essential regarding documentary evidence in miscellaneous advances?

It must exist to substantiate recovery or adjustment. Signup and view all the answers

What should be confirmed regarding recovery items in miscellaneous advances?

Adjustments should be meticulously documented. Signup and view all the answers

Which element is critical in managing work orders for the workshop?

Inclusion of all extra departmental charges as per rules. Signup and view all the answers

What is not a likely issue if there are credit items in the balances?

Delay in the approval of work orders. Signup and view all the answers

What is the primary purpose of the suspense register?

To ensure no difficulties in tracing the source of items. Signup and view all the answers

How often should the balance under each of the Suspense Heads be 'proved'?

Every month. Signup and view all the answers

What action should the Accounts Officer take regarding items in suspense accounts?

Immediately obtain necessary information for removal. Signup and view all the answers

Which of the following is NOT permissible regarding the carrying of items to miscellaneous advances?

Carrying an item not related to an adjustment. Signup and view all the answers

What must be ensured for items placed in Suspense Accounts?

They have detailed particulars documented. Signup and view all the answers

What happens if a recovery in Miscellaneous Advances exceeds the debit amount?

It should be credited to the head of service concerned. Signup and view all the answers

What role does scrutiny play regarding items in Suspense Accounts?

To ensure only unavoidable items are retained. Signup and view all the answers

What is necessary for the reconciliation of balances under Suspense heads at the end of the financial year?

Completeness in all respects is required. Signup and view all the answers

What is a requirement regarding the documentation of details in the suspense register?

Every item must be traced back to a voucher. Signup and view all the answers

Which of the following statements is a correct requirement for handling miscellaneous deposits?

There should be no debit items listed under miscellaneous deposits. Signup and view all the answers

What must be reconciled half-yearly in relation to unpaid wages?

The General Books balances with the Unpaid Wages Register. Signup and view all the answers

When scrutinizing deposits from Branch Line companies, which of the following must be ensured?

All items accounted for relate directly to ongoing projects. Signup and view all the answers

Which of the following elements is important for the internal check of loans to government servants?

A certificate that outlines the total amounts disbursed needs to be prepared. Signup and view all the answers

What specific requirement relates to the items recorded under miscellaneous deposits?

No items should appear that are not explicitly stated in regulated guidelines. Signup and view all the answers

What type of transactions should be avoided from being recorded under suspense heads as much as possible?

Transactions that can be adjusted under final heads Signup and view all the answers

In which scenario would transactions typically be placed in suspense accounts?

When detailed particulars are not known Signup and view all the answers

Which type of accounts are typically included under suspense heads on the Railways?

Inventory accounts and sundry debtors Signup and view all the answers

What is an important condition for cash advances recorded in suspense accounts?

They should be recoverable through adjusted documents Signup and view all the answers

How should transactions be categorized if allocated to suspense heads?

They should be cleared only on final approval Signup and view all the answers

Why is the temporary use of suspense accounts important in railway accounting?

To provide a link between commercial and governmental accounting Signup and view all the answers

What is a necessary action regarding suspense accounts at the end of a financial period?

Prove the balance under each of the suspense heads Signup and view all the answers

What should be ensured regarding the items placed in Suspense Accounts?

They are posted with full detailed particulars. Signup and view all the answers

How frequently should the balance under each of the Suspense Heads be 'proved'?

Every month. Signup and view all the answers

Which action must the Accounts Officer take to clear items under suspense accounts?

Obtain necessary information and acceptances promptly. Signup and view all the answers

What is required regarding the reconciliation of balances under the Suspense heads at the end of the financial year?

It must be comprehensive and complete. Signup and view all the answers

Which condition applies to an item of receipt carried to miscellaneous advances?

It should only be for adjustment against a debit already there. Signup and view all the answers

What should be reviewed to avoid potential overstocks?

Exception Reports generated by the computer Signup and view all the answers

What happens if a recovery in Miscellaneous Advances exceeds the amount at debit?

It should be credited to the head of service concerned or to Deposits. Signup and view all the answers

Which of the following must be ensured regarding computerized store ledgers?

There are no negative quantities recorded Signup and view all the answers

Which statement about the suspense register is accurate?

Transactions need to be recorded with enough detail for tracing. Signup and view all the answers

What is necessary for all debit items recorded in sales?

Sufficient documentary evidence must be available Signup and view all the answers

Which of the following is NOT permitted regarding the carrying of items to miscellaneous advances?

Recording an item of receipt without adjustments. Signup and view all the answers

What type of items are prohibited in the debit section of purchases?

Debit items not related to current liabilities Signup and view all the answers

When handling small value balances, what adjustment is required?

Adjustments must be made for rounding off of rates Signup and view all the answers

Which is a condition for acceptable credit items in the sales record?

They can only occur from auction sales or tenders Signup and view all the answers

What must be noted about entries without corresponding values in store ledgers?

They cannot exist as valid entries Signup and view all the answers

Which condition is required regarding credits in general purchases?

There are no debit items unless specifically allowed Signup and view all the answers

What should be confirmed before carrying advance payments for store purchases?

They are documented as miscellaneous advances Signup and view all the answers

What aspect of sales must be authorized appropriately?

Sales made under competent authority Signup and view all the answers

Which of the following must be true regarding the documentation for jobs undertaken for outsiders?

Sufficient deposit must be collected as per regulations. Signup and view all the answers

What is a requirement for the scrutiny of items listed under miscellaneous advances?

All items are recoverable in cash or adjustable. Signup and view all the answers

Which element is crucial for avoiding inefficient balances in workshop manufacture suspense?

Completion of regular adjustments for overcharges and undercharges. Signup and view all the answers

Which of the following is NOT a verification step for miscellaneous advances?

Verifying credit items for validity. Signup and view all the answers

What should be ensured regarding balances pertaining to workshop manufacture suspense?

No inefficient balances should remain unaddressed. Signup and view all the answers

What action should be taken if credit items are discovered in the balances of workshop manufacture suspense?

They must be immediately adjusted. Signup and view all the answers

Which statement is true about the items recorded under workshop manufacture suspense?

They should include materials, labor, and work oncost charges. Signup and view all the answers

What documentation is essential to support recovery or adjustment of miscellaneous advances?

Documentary evidence of the debit to the Railway. Signup and view all the answers

What must happen to small value balances that arise from rounding off rates?

They should be closely monitored and adjusted. Signup and view all the answers

What is required when establishing work orders in workshop manufacture suspense?

Proper work orders must exist under competent authority. Signup and view all the answers

Study Notes

Chapter VI: Suspense Accounts

Suspense accounts record transactions that cannot be immediately allocated to final account heads.
Various accounts are handled as suspense accounts, including inventory (e.g., stores, workshop manufacturing), advances, payable demands, traffic accounts, deposits from other railways or branch lines, and loans and advances from the central government.
Suspense accounts also include Reserve Bank suspense, M-Remittances, and review results.
A half-yearly review of suspense balances is conducted.
Transactions in the suspense accounts are temporarily held pending clearance by payment, recovery, or adjustment to the final account heads.
Accounts are operated to handle inventory, debtors, creditors, and works-in-process.
Suspense accounts help record transactions temporarily, pending adjustments or clearance.

Transactions Booked to Suspense Accounts

Inventory accounts (e.g., stores, purchase, sales)
Cash advances to various parties
Material issued to contractors
Transactions with temporarily unknown details or awaiting party acceptance
Link between commercial and government accounting systems for accrued earnings and expenses
Maintaining transaction details in suspense registers, including voucher references, for efficient item tracing
Items are kept in suspense if necessary for payment or recovery or final adjustment to final account heads.

Review of Suspense Balances

Ensure computerized ledgers and transaction statements match general ledger amounts for "Stores" suspense account.
Verify that pricing rates comply with accounting rules.
Address any quantities without values, minus values, or quantities without values for minor values arising from rate rounding.
Monitor any computer-generated exception reports related to overstocks.
Review credit and debit items for "Purchases" (imported/indigenous).
Ensure all related charges and/or credit items are current and relate to cash sales, auction sales, or sale by tender for "Workshop Manufacture Suspense."
Address jobs, materials, and work-on-cost charges expenditures on completed or unfinished jobs for "Workshop Manufacture Suspense."
Review "Miscellaneous Advances" to ensure no credit items, and that all are recoverable.
Validate and review "Demands Payable" items, ensuring no debit items and all outstandings are associated with revenue liabilities.
"Traffic Accounts" balances should be validated against station and accounts office balance sheets, reviewing unrealised earnings and steps for realisation.
"Other Railways" balances should be updated monthly per the laid-down procedures, checking for outstanding items.
"Deposits" balances are reviewed for appropriate allocations (e.g., unpaid wages, private companies, and miscellaneous deposits).
"Reserve Bank Suspense" items are verified to ensure that all are correctly debited/credited by the Railway to the Reserve Bank.
"M-Remittances" reflect transactions between the Railway and other departments and should have timely memo clearances.
Half-yearly reviews of suspense balances (Form A 620) are conducted, reviewing items noted during the review period, ensuring those items require further action and those that can be cleared.
Items that are found to be recorded incorrectly or needing further clearing after review.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Explore the intricacies of suspense accounts in this quiz based on Chapter VI. Learn how various transactions are temporarily held and the relationship between commercial and government accounting systems. Test your knowledge on the types of accounts classified as suspense and their reviewing processes.