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What is the purpose of a suspense account?

  1. A To hold profits before distribution
  2. B To temporarily record a difference or unidentified item until it is investigated and corrected
  3. C To record depreciation
  4. D To hold cash reserves
Answer

To temporarily record a difference or unidentified item until it is investigated and corrected

A suspense account balances the books temporarily when an error or unidentified entry exists. It must be cleared before final accounts are prepared.

All Accounting MCQs

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