Question

Answer in one sentence only :

State the meaning of contra entry.

Answer 1

Those entries that involve both the accounts, i.e. Cash A/c and Bank A/c are termed as Contra Entries. When cash is deposited in a bank or withdrawn from the bank for office use, then both the accounts will be affected and, therefore, it will be recorded on both sides of the Cash Book. In these entries, one account is credited and the other is debited. For example, if Rs 2,000 are withdrawn from the bank for office use, then the entry will be:

Cash A/c	Dr.	2,000
To Bank A/c			2,000