Discussion Topics

▪ Stages of the accounting process/cycle

▪ Source Documents
▪ Double-Entry System
Day/Session 3 ▪ Basic and Extended Accounting
Equation
▪ Rules of Debit and Credit
The Accounting Process: ▪ Chart of Accounts with Codes
Recording Transactions ▪ Types of Accounts
▪ Suspense Accounts
▪ Recording Transactions
▪ Concept of Journal Entries
A.S.Noorudin Ahmed FCMA ▪ General Journal
Associate Professor, ICMAB ▪ Special Journal
▪ Petty Cash
▪ Post to ledger accounts
▪ Group, General and Subsidiary Ledger
▪ Trial Balance
Stages in the Accounting Cycle
 Source Documents
• A source document indicates the source/existence/evidence of a transaction.
Examples include:
• Invoices: Purchase invoices (credit purchase of inventories)
• Debit Notes: issued by business (buyer) to return goods to supplier purchased earlier or
for claiming allowance for damaged goods.
• Petty cash vouchers
• Time cards
• Stock cards
• Bank invoices
• Check counterfoils [A counterfoil is the part of a cheque, ticket, or other document that
that is kept by the issuer while giving the other part to someone else.]
• Confirmation slips
• Statements
• Check stubs [A check stub is a business's record of each check written for a cash
payment transaction. A check stub is the part of a check that is kept by the payee with
information such as the check number, date, and amount.]
 Double-Entry System
• Recording dual effects (debit and credit) of a transaction such that assets
equal to the sum of external liabilities and owner’s (shareholders) equity
(capital).
• When a transaction occurs in a double entry system, one account is
debited while another account is credited.
• Increase in assets (such as cash, bank balance, receivables, land, building,
equipment) may cause either decrease in other assets (such as
cash/bank balance/fair value of other assets surrendered) or increase in
liability (Accounts payable or note payable if purchased on
account/credit) or increase in owner’s equity usually via revenue (sales
or service performed).

• Now think about decrease in assets……….this may

cause……………..?????
 Accounting Equation
Accounting equation describes relationship among assets, liabilities, and equity.
Asset = Liabilities

Assets = External liabilities + Internal Liabilities

Basic Accounting
Assets = Liabilities + Shareholders’/Owner’s Equity Equation/Balance
sheet equation
Assets [Applicable for Sole = Liabilities + Owners Equity + Additional
proprietorship or partnership investment by owners - Drawings by owners
business] +Revenue (including gain)-Expense (including
loss) Extended
Accounting
Assets [Applicable for companies] = Liabilities +Shareholders’ Equity +New share Equation
issue (IPO)-Dividend + Revenue (including
gain)-Expense (including loss)
 Rules of Debit and Credit
Debit is the left hand side of a ledger account that shows increase in assets and
expenses and decrease in liability, equity, and revenue. So, Credit is the ……just
opposite
Dr. Cr.
Assets (c/d or c/f) + -
[Increase] [Decrease] Normal balance is Debit
Expenses including losses + -

Liabilities (c/d) - +
Owner’s equity (c/d) - + Normal balance is Credit

Revenues including gain - +

c/d = Carried down; c/f= Carried forward
 The Golden Rules for Debit and Credit
▪ Debit what comes in and credit what goes out. For example, cash
received for any reason…..cash is debited……cash outflows for any
reason….cash is credited..
▪ Debit all expenses [e.g., salary paid, rent expense, depreciation
expense] and credit all incomes and gains [sales revenue/ service
revenue].
▪ Debit the Receiver [buyer/accounts receivables/debtor], Credit the
giver [supplier/accounts payables/creditor].
 Chart of Account
• A chart of accounts is a list of all the accounts used by an entity in its
general ledger to record all the transactions and events under double-entry
systems.
• A chart of accounts includes asset accounts, liability accounts, equity
accounts, income accounts, expense accounts and relevant
contra-accounts.
• Each account is given a specific number depending on the nature of the
account.
• It is the starting point of an accounting system because it tells which
accounts to include in a general ledger and what mechanism to use in
making and posting journal entries.
 Typical Chart of Accounts with Codes
Accounts Title Code/Accounts Name Nature Normal Balance
Cash 101 Asset Debit
Trade/Accounts receivables 110 Asset Debit
Notes Receivable 115 Asset Debit
Prepaid rent 120 Asset Debit
Equipment 160 Asset Debit
Trade/Accounts payable 201 Liability Credit
Notes Payable 215
Deferred revenue 220 Liability Credit
Owners' Capital 301 Equity Credit
Owner’s Drawing 320 Equity Debit
Sales revenue 401 Income Credit
Investment Revenue (Interest or dividend 420 Income Credit
received/receivable)
Sales return and allowance 460 Contra income Debit
Sales discount 470 Contra income Debit
Purchase 501 Expense Debit
Purchase return 520 Contra expense Credit
Purchase discount 540 Contra expense Credit
Rent expense 580 Expense Debit
Salary expense 590 Expense Debit
Utility expense 600 Expense Debit
 An alternative approach for a large company
Code Head of Accounts

100000 Assets
110000 Non-current Assets [Also known as Fixed Assets]
110100 Property, Plant and Equipment
110110 Land and Land Development
110111 Land Purchase

110112

110132 Land Development

110120 Building and Premises

110130 Equipment [generator, air conditioner and fire extinguisher]
110140 Computer and Software Items
110200 Investment
110300 Intangible Assets
 Journal

A journal is the book of original entry where transactions are recorded for the first time chronologically.

Recording dual effects (debit and credit) of a transaction such that assets equal to the sum of external
liabilities and owner’s (shareholders) equity (capital).

Asset = Liabilities
Assets = External liabilities + Internal Liabilities (to the owners)
Assets = Liabilities +Owner’s Equity (capital or shareholders equity)
Assets [Applicable for Sole proprietorship or = Liabilities +Owners Equity +Additional investment by
partnership business] owners-Drawings by owners +Revenue (including gain)-Expense
(including loss)

Assets [Applicable for companies] = Liabilities +Owners Equity +New share issue (IPO) - Dividend +
Revenue (including gain)-Expense (including loss)
 Types of Journal Entries
General Journal
• Business with relatively few volume of transactions can record all the transactions in a
single journal-the General Journal.

Alternative to General journal

• Business with relatively large volume of transactions can record their transactions in
multiple journals.
A. Special journal: Record recurring transactions separately in a separate journal book.
1. Purchase journal (Single column-records only merchandize purchased on account/credit; Multiple
column-all types of credit purchase)
2. Sales journal: (Single column-records only merchandize sold on account/credit; Multiple
column-all types of credit sales)
3. Cash receipt journal [records all types of cash receipts]
4. Cash payment journal [record all types of cash payments]
5. Notes receivable
6. Notes payable
B. General Journal: All transactions except those already recorded in the special journals.
7. Purchase return and allowance
8. Sales return and allowance
 RULES OF DEBIT AND CREDIT
Dr. Cr.
Assets (c/d) + -
Normal balance is Debit
Expenses including losses + -

Liabilities (c/d) - +
Normal balance is Credit
Owner’s equity (c/d) - +
Income/Revenues including gain - +
 Review Problem 1: Periodic vs. Perpetual
ABC Limited identified the following transactions for the month of December 2022:
December 1: Invested Tk 2,000,000 cash by the shareholders to start the business.
December 2: Purchase equipment for Tk 130,000, paid cash Tk 70,000 and the remainder will be paid in the next month.
December 3: Paid rent in advance for the office for one year Tk 180,000
December 5: Purchase Inventories/merchandise/goods for cash Tk 50,000 from X Ltd.
December 6: Purchase merchandise/goods on account 80,000 from X Ltd, term 2/15, n/30, invoice no. 3890.
December 9: Returned goods to X LTD for Tk 4,000 and send a debit note.
December 10: Sold merchandise on account for Tk 85,000 to Mr. Tarek, terms 1/15, n/EOM (cost of goods sold 70%).
December 12: Received return of damaged merchandise from Mr. Tarek Tk. 5,000.
December 13: Grant allowance to Mr. Tarek for fully damaged goods Tk 2,000.
December 14: Sold merchandise for cash Tk 100,000 to Mr. Kalam (cost of goods sold 70%).
December 15 : Collect payments from Mr. Tarek in full and final settlement.
December 18 : Paid X Ltd for goods purchased on December 6 in full and final settlement.
December 20 : Paid cash dividend Tk 50,000 to the shareholders.
December 25 : Salary paid Tk 80,000 for the month of December.
December 28: Received cash in advance from Mr. Khan Tk 60,000 for merchandise to be delivered in the next month.
December 30: Issue 10,000 new shares to raise capital @Tk 50 (face/par value Tk 10).
Required:
1. Record the above transactions in a General Journal in the books of ABC Limited .
2. Prepare special and general journals.
 ABC Limited
General Journal (GJ1) For the month of December 2022 [Periodic Inventory System]
Date Accounts Title and Narration Reference Debit Credit
December 1, Cash Dr. 101 2,000,000
2022 Share Capital Cr. 301 2,000,000
(To record cash investment by owner)
December 2 Equipment Dr. 150 130,000
Cash Cr. 101 70,000
Accounts Payable Cr. 201 60,000
December 3 Prepaid rent 120 180,000
Cash 101 180,000
(To record payment of advance rent)
December 5 Purchase (goods/merchandise) [Inventories Dr. if perpetual inventory] 501 50,000
Cash 101 50,000
[To record cash purchase]
December 6 Purchase (goods/merchandise) [Inventories Dr. if perpetual inventory] 501 80,000
Trade/Accounts payable-X Ltd. 201 80,000
December 9 Trade payable-X Ltd. Dr. 201 4,000
Purchase return [Inventories Cr. if perpetual inventory] 540 4,000
December 10 Accounts/Trade Receivable-Mr. Tarek Dr. [Periodic] 110 85,000
Sales revenue Cr. 401 85,000
December 12 Sales return and allowance [Periodic] 5,000
Trade Receivable-Mr. Tarek 5,000
[To record sales return]
December 13 Sales return and allowance 2,000
Trade Receivable-Mr. Tarek 2,000
[To record sales allowance]
December 14 Cash Dr. 100,000
Sales Revenue 100,000

December 15 Cash 77,220

Sales discount 780
Trade/Accounts Receivable-Mr. Tarek [85,000-5,000-2,000] 78,000

December 18 Trade/Accounts payable-X Ltd. [80,000-4,000] 76,000

Cash 74,480
Purchase discount [2% of 76,000] 1,520
December 20 Retained earnings/Dividend Dr. 705 50,000
Cash 101 50,000

December 25 Salary expense Dr. 330 80,000

Cash 101 80,000

December 28 Cash 101 60,000

Deferred/unearned/Advanced revenue 280 60,000

December 30 Cash 101 500,000

Share Capital [10,000 × 10) 201 100,000
Share premium [10,000 × 40) 260 400,000
(To record issue of new shares at premium)
 ABC Limited
General Journal (GJ1) For the month of December 2022 [Perpetual Inventory System]
Date Accounts Title and Narration Reference Debit Credit
December 5 Inventories Dr. 501 50,000
Cash Cr. 101 50,000
[To record cash purchase]
December 6 Inventories Dr. 501 80,000
Trade/Accounts payable-X Ltd. 201 80,000
December 9 Trade payable 201 4,000
Inventories Cr. 540 4,000
December 10 Accounts/Trade Receivable-Mr. Tarek Dr. [Periodic] 110 85,000
Sales revenue Cr. 401 85,000
Cost of goods sold Dr. 59,500
Inventories Cr. [with the costs of inventory] 59,500

December 12 Sales return and allowance [Periodic] 5,000

Trade Receivable-Mr. Tarek 5,000
[To record sales return]
Inventories Dr. 3,500
Cost of goods sold Cr. 3,500
December 14 Cash Dr. 100,000
Sales Revenue 100,000
Cost of goods sold Dr. 70,000
Inventories Cr. [with the costs of inventory] 70,000
December 18 Trade/Accounts payable-X Ltd. [80,000-4,000] 76,000
Cash 74,480
Inventories [2% of 76,000] 1,520
 Periodic vs. Perpetual
Perpetual inventory system Periodic inventory system

Real time recording- Records transactions instantly Record transactions at the end of a period…at the end
of each week, month or year
Purchase of inventories are recorded as (current) assets Purchase of inventories are recorded as an expense
[Inventories account] [purchase account)
Purchase returns, discount, freights and other costs Purchase returns, discount, freights and other costs
associated with the purchase of goods are all associated with the purchase of goods are recorded in
recorded/adjusted to the inventories account separate accounts
To record sales transaction as revenue, corresponding Only sales revenues are recognized; corresponding costs
costs and inventories are recognized immediately are determined later at the end of the reporting period
Cost of goods sold/cost of sales and ending inventory Cost of goods sold/cost of sales can be determined only
data are readily available after paying substantial effort, while the valuation of
ending inventory requires physical count
Suitable for large companies Suitable for small companies or enterprises with low
volume of transactions
 Differences in terms of Journal Entries
Nature of transactions Perpetual inventory system Periodic inventory system
Purchase of Merchandize inventory Dr. Purchase Account Dr.
goods/merchandize Trade or Accounts Payable/cash Cr. Trade/Accounts Payable/cash Cr.
Freight on purchase Merchandize inventory Dr. Freight-in A/C Dr.
Accounts Payable/cash Cr. Accounts Payable/cash Cr.
Return goods to Trade or Accounts Payable/cash Dr. Trade or Accounts Payable/cash Dr.
supplier Merchandize inventory Cr. Purchase return Cr.
Make payments to Trade or accounts payable Dr. Trade or accounts payable Dr.
suppliers Cash…………………………………..Cr. Cash…………………………………..Cr.
Merchandize inventory ……..Cr. (with the amount of discount Purchase discount ……..Cr. (with the amount of discount
received at the time of paying dues to suppliers) received at the time of paying dues to suppliers)
Sales goods to (1) Trade or accounts receivable Dr. Trade or accounts receivable Dr.
customers Sales revenue Cr. [with the selling price] Sales revenue Cr.
(2) Cost of goods sold Dr.
Merchandize inventory Cr. [with the costs of inventory]
Return from customers (1) Sales return (and allowance) Dr. 5,000 Sales return Dr.
Trade receivable Cr. 5000 Trade receivable Cr.
(2) Merchandize inventory Dr. 3,500
Cost of goods sold Cr. 3,500
Grant allowance to Sales (return and) allowance Dr. 2,000 Sales (return and) allowance Dr.
customer Trade receivable Cr. 2,000 Trade receivable Cr.
Receive payments from Cash Dr. Cash Dr.
customer Sales or cash discount Dr. Sales or cash discount Dr.
Trade or accounts receivable Cr. Trade or accounts receivable Cr.
 Special Journal [For Perpetual Inventory System]
Purchase Journal (Single Column) [P1]
(Records only credit purchase of inventories/goods/merchandize)

Date Accounts Credited Invoice Terms Reference Inventories (Goods) Dr.

Trade/Accounts Payable Cr.
December 6 X Ltd. 3890 2/15, Subsidiary 1 80,000
n/30
10 Y 4444 65000

TOTAL 145,000
130/201
 Sales Journal [S1]
(Records only credit sales of Inventories/goods/merchandize)

Date Accounts Invoice Terms Reference Trade Receivable Dr. Cost of Goods Sold Dr.
Debited Sales Revenue Cr. Inventories Cr.

December Mr. Tarek 787679 1/15, S1 85,000 59,500

10 n/EOM

1 X 547657 200000 140,000

Y
Z
T
R
285,000 59,500
110/401 501/130
 Cash Receipt Journal [CR1]
(Records all types of Cash receipts)
Date Accounts Invoice Terms Reference Cash Dr. Trade Sales Sales Cost of Goods Other
Credited Receivable Discount Revenue Sold Dr. Accounts
Cr. Dr. Cr. Inventories Cr. Cr.

December Share Capital 301 2,000,000 2,000,000

1
14 454545 100,000 100,000 70,000
15 Mr. Tarek S1 77,220 78,000 780
28 Deferred revenue 60,000 60,000

30 Share Capital 301 100,000 100,000

Share Premium 400,000 400,000

Total =27,37,220
101 110 505 401 520/130
 Cash Payment Journal [CP1]
Date Accounts Invoice Terms Reference Accounts Inventories* Cr. Cash Cr. Other Accounts
Debited payable Dr. Dr.

December 2 Equipment 70,000 70,000

December 3 Prepaid rent 120 180,000 180,000

5 Inventories 130 60,000 60,000

18 X Ltd S1 76,000 1,520 74,480

20 Retained 570 50,000 50,000

earnings
25 Salary 580 80,000 80,000
expense
Total =514,480

201 130 101

 General Journal
Date Accounts Title and Narration Reference Debit Credit
(Ledger page)
December 9 Trade payable (A/P) 201 4,000
Inventories (Purchase return) 540 4,000
December 12 (a) Sales return and allowance 5,000
Trade Receivable-Mr. Tarek 5,000
[To record sales return]

(b) Cost of goods sold Dr. [70%] 3,500

Inventories Cr. 3,500

December 13 Sales return and allowance 2,000

Trade Receivable-Mr. Tarek 2,000
[To record sales allowance]
 Petty Cash Statement
• Insignificant expenses are usually paid using cash sanctioned to cashier by the CFO
or Head of Accounts and Finance. This statement shows where petty funds are
used and what is the ending balance of cash available at the end of a particular
period in the hand of cashier.

Example:
XYZ Enterprise maintains petty cash system. The cashier is given Tk. 1,000 on 1st December 2021.
Transactions for the month related to petty cash follows:
December 2 : paid for postage stamp Tk. 10.
December 5 : paid for office supplies Tk. 50
December 7 : paid to the peon for traveling Tk. 30
December 20 : paid for revenue stamp Tk. 30
December 25 : paid for kitchen supplies Tk. 100
December 30 : paid for office supplies Tk. 80
The petty cashier should maintain these expenses against proper vouchers (if not
available should create one through an authorized person) in a petty cash
book/statement in the following manner.

Amount Date Particulars V.N Total Stamp Supplies Traveling

received
1,000 December 1 Cash
December 2 Postage stamp 5555 10 10
December 5 Office supplies 50 50
December 7 Traveling 30 30
December 20 Revenue stamp 30 30
December 25 Kitchen 100 100
supplies
December 30 Office supplies 80 80
Total 300 40 230 30
Balanced c/d 700
1,000 1,000
700 January 1 Balanced b/d
 Accounts and Its Classifications
• In accounting, an account is a record in the general ledger that is used to
sort and store transactions or that tracks the financial activities of a
specific asset, liability, equity, revenue, or expense. These records increase
and decrease as the business events occur throughout the accounting
period. For example, companies will have a Cash account in which to record
every transaction that increases or decreases the company's cash.
• There are 3 types of accounts.
• Real account − It relates assets and liabilities; it does not include people
accounts. They carry forward every year.
• Personal account − Connects individuals, firms and companies accounts.
These accounts balances are also carried forward to the next year.
• Nominal account − Relates all income, expenses, losses and gains accounts.
 LEDGER ACCOUNT
• Ledger is a book or register in which all the accounts of a business are
grouped, each one on a separate page. Each account has a unique reference
number which is helpful in the posting process.
• Types of Ledger Accounts:
1. General Ledger: Contains all those ledger accounts whose balances are
reported in the financial statements.
2. Subsidiary Ledger: Contains detailed records of some general ledger
accounts such as accounts receivable or payables (known as control
accounts). They usually include personal ledger accounts for each
individual customer/supplier/lender/borrower of a company.
 Typical Chart of Accounts [Simple]
Accounts Title Code/Accounts Nature Normal Balance
Name
Cash 101 Asset Debit
Trade/Accounts receivables 110 Asset Debit
Notes Receivable 115 Asset Debit
Prepaid rent 120 Asset Debit
Equipment 160 Asset Debit
Accumulated depreciation 190 Contra account Credit
Trade/Accounts payable 201 Liability Credit
Notes Payable 215 Liability Credit
Deferred revenue 220 Liability Credit
Owners' Capital 301 Equity Credit
Owner’s Drawing 320 Equity Debit
Sales revenue 401 Income Credit
Investment Revenue (Interest or dividend 420 Income Credit
received/receivable)
Sales return and allowance 460 Contra income Debit
Sales discount 470 Contra income Debit
Purchase 501 Expense Debit
Purchase return 520 Contra expense Credit
Purchase discount 540 Contra expense Credit
Rent expense 580 Expense Debit
Salary expense 590 Expense Debit
 Chart of Accounts [Advanced]
Code Head of Ledger Accounts

Group Ledger General Ledger Subsidiary Ledger

100000 Assets

110000 Non-current Assets

[Also known as Fixed Assets]
110100 Property, Plant and Equipment

110110 Land and Land Development

110111 Land Purchase

110112 Land Development

110120 Building and Premises

110130 Equipment [generator, air conditioner

and fire extinguisher]
110140 Computer
110200 Investment Investment in share/bond Investment in X LTD share
110300 Intangible Assets Goodwill, copyright, patent, Patent A, Patent B, Patent C
franchise, software
 Chart of Accounts [Sample]
Code Head of Accounts
110400 Donated Assets
110500 Other Fixed Assets
120000 Current Assets
120100 Inventories
120101 Raw Materials

110102 Work-in-process

110103 Finished Goods

110200 Receivables
110300 Prepayments
110400 Cash in hand and Bank
110401 Cash

110402 Petty cash

 Chart of Accounts [Sample]
Code Head of Ledger Accounts

Group Ledger General Ledger Subsidiary Ledger

400000 Revenue/Income

410000 Sales Revenue

410100
410110
410111
410112
410120 Product line 1
410130 Product line 2
410140
410200 Other Revenue Rental income Rent from Property A, B, C
Investment revenue
 General Ledger
Debit Cash 101 [T-Account] Credit
Date Particulars Ref Tk Date Particulars Ref Tk
December 1 Share Capital CR1 2,000,000 December 2 Equipment CP1 70,000
December 14 Sales revenue CR1 100,000 December 3 Prepaid rent CP1 180,000
December 15 Accounts Receivable CR1 77,220 December 5 Purchase/Inventories CP1 50,000
December 28 Unearned revenue CR1 60,000 December 18 Accounts payable CP1 74,480

December 30 Share Capital CR1 500,000 December 20 Retained Earnings CP1 50,000

December 25 Salary expense CP1 80,000

December 30 Balance c/d 2,232,740
2,737,220 2,737,220
 Cash A/C [3-Columns Ledger]
Date Accounts Title Ref Dr Cr. Balance
December 1 Share Capital 301 2,000,000 2,000,000

December 2 Equipment 70,000 1,930,000

December 3 Prepaid rent 180,000 1,750,000

December 5 Purchase 50,000 1,700,000

December 14 Sales revenue 100,000 1,800,000

December 15 Accounts Receivable 77,220 1,877,220

December 18 Accounts payable 74,480 1,802,740

December 20 Retained Earnings 50,000 1,752,740

December 25 Salary expense 80,000 1,672,740

December 28 Unearned revenue 60,000 1,732,740

December 30 Share Capital 500,000 2,232,740

 Trade Receivable
Date Reference Invoice No. Debit Credit Balance
December GJ1/Sales revenue 85,000 85,000
10
December Sales return 5,000 80,000
12
13 Sales allowance 2,000 78,000
15 Cash 77,220
Sales discount 780 00000

Prepaid Rent
Date Reference Invoice No. Debit Credit Balance
December 3 GJ1/Cash 180,000 180,000

Trade Payable
Date Reference Invoice No. Debit Credit Balance (Cr)
December 6 GJ1/Purchase 80,000 80,000
9 Purchase return 4,000 76,000
18 Cash 74,480
Purchase discount 1,520 0000000
 Subsidiary Ledger
Accounts Receivable subsidiary ledgers
Mr. Tareq

Date Reference Invoice No. Debit Credit Balance

December Beginning balance 000000
1
December S1 85,000 85,000
10
12 GJ1 5,000 80,000
13 GJ1 2,000 78,000

15 CR1 78,000 00,000

Accounts Payable subsidiary ledgers

 Trial Balance
SL. Accounts Title Reference Dr. Cr.
1 Cash 101 2,322,740
2 Trade receivables 110 0000000
3 Prepaid rent 120 180,000
4 Equipment 160 300,000
Trade payable 201 00000000
Deferred revenue 220 60,000
Mr. Nasir’s Capital 301 2,800,000
Sales revenue 401 185,000

Sales return and allowance 460 7,000

Sales discount 470 780
Purchase 501 130,000
Purchase return 520 4,000
Purchase discount 540 1,520
Rent expense 580 30,000
Salary expense 590 80,000
3,050,520 3,050,520
 Suspense Account
• A suspense account is an account used temporarily to bring agreement between
the two sides of the accounting equation [A=L+OE].
• Once the accounting staff investigates and clarifies the purpose of this type of
transaction, it shifts the transaction out of the suspense account and into the
correct account(s).

If the debit side shows deficiency, it should be treated either as expense [if the
amount is immaterial in relation to total assets of the company]or as asset [ if the
amount is material in relation to the total assets of the company].

Please note that suspense account may be required only for partial omission or
error, complete omission of transaction will not make the balances unequal.