What is a suspense account? Is it necessary that is suspense account will balance off after rectification of the errors detected by the accountant? If not, then what happens to the balance still remaining in suspense account?
A suspense account is an account in which the difference in the trial balance is put till such time that errors are located and rectified. It facilitates the preparation of financial statements even when the trial balance does not tally.
It is not necessary that the suspense account will balance off immediately after the rectification of errors detected by the accountant. Ideally, when all errors are located and rectified, the suspense account stands disposed off.
However, if a balance still remains in the suspense account due to non-detection of errors affecting the trial balance, it is carried forward to the next year. This balance is eliminated as and when the remaining errors are located.
Explanation
The answer is derived directly from the provided text chunks. The definition is found in the section 'Meaning and utility of suspense account'. The explanation regarding whether it balances off and what happens to the remaining balance is found in the 'Note' regarding the debit balance of ₹ 17,400 and the section on 'Disposal of suspense account'.