Recording of Transactions – II · Class 11 · CBSE · Commerce Accountancy
What is a contra entry in accounting, and in which book is it recorded?
Practice question from Recording of Transactions – II (Class 11 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
medium · Subjective · Q-4525D4
What is a contra entry in accounting, and in which book is it recorded?
Answer: A contra entry is a transaction that affects both the cash and bank accounts simultaneously, such as cash deposited into the bank or cash withdrawn from the bank for office use. It is recorded on both sides of a double-column or triple-column cash book and is denoted by the letter 'C' in the ledger folio column, meaning no further posting is required in the ledger for these entries.
Solution
A contra entry relates to simultaneous movements between cash and bank balances within the business. Because both accounts are maintained within the Cash Book, the entry appears on both sides, neutralizing its net effect on total cash and bank combined, and is marked with a 'C'.
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