Question

Bank credits income of doubtful interest to Interest Suspense Account because of
(a) Concept of Conservatism
b) Objectivity
(c) Consistency​

Answer 1

Bank credits income of doubtful interest to Interest Suspense Account because of the concept of conservatism.

Option (a) is correct.

Explanation:

• Nowadays an interest amount is charged to the customer when the loan is granted to him/her.
• Whne its the end of the year then the interest on such kind of loans become doubtful and it implied the concept of conservatism on the customer.
• According to this concept, the account of the consumer is suspended due to doubts and fears.