Suspence Accounts

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monia

monia (Querist)
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06 July 2011 Can Suspence account impact on P&L account? if yes how please suggest

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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06 July 2011 If you have created a suspense account and the group has been given as current assets or current liabilities then all debits and credits shall be reflected in the Balance Sheet either in the Assets side or in the Liabilities side.

Now suppose an item of expense which has no details and you have booked under suspense account then it will show as an asset whereas it is an expenses. Hence your expenses shall be understated and profit overstated. Likewise several items of P & L are passed the profitability shall effect.