What is the difference between an over-debit and an under-credit?

The entry for over-debit is a debit to the account and the entry for under-credit is a credit to the account.

What is the difference between an over-credit and an under-debit?

The entry for over-credit is a credit to the account and the entry for under-debit is a debit to the account.

What is a suspense account?

Suspense account is an account created by a company or a bank to record transactions which have been entered incorrectly and corrections need to be done manually. The amount for these mis-recorded transactions will be transferred from the suspense account.

Which accounts are debited with a suspense account?

Suspense account credits the accounts which have been under-debited and debits the accounts which have been over-debited. For instance, if an account has been wrongly stated as over-debited in the Trial Balance, then it will be credited in the suspense account.

What is the difference between a debit and a credit?

In simple terms, a debit is an entry on the left side of an account, and a credit is an entry on the right side of an account. The purpose of debits and credits is to maintain the equation that total assets must equal total liabilities plus equity.

Errors Balancing an Account

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 06, 2023

If an arithmetical error occurs when balancing a ledger account, the error will be isolated to that account only.

Despite this, it will cause the two sides of the trial balance to give different totals. This error may result in:

The account shows a balance larger than the correct balance, i.e. an over-debit (if it is a Dr. balance) or an over-credit (if it is a Cr. balance)

The account shows a balance smaller than the correct balance, i.e. an under-debit (if it is a Dr. balance) or an under-credit (if it is a Cr. balance)

To correct an over-debit or an under-credit, credit the account with the amount of difference.

Similarly, to correct an under-debit or an over-credit, debit the account with the amount of difference.

The corresponding entry, in both cases, is made in the suspense account.

Errors Balancing an Account FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.