Question

Transaction recorded both on debit and credit side of cash book is known as contra entry.

• A. True
• B. False

Answer 1

The correct option is A True

In cash book, cash transactions (transactions affecting cash in hand) are recorded in the cash column and bank transactions (transactions affecting cash at bank) are recorded in the bank column. On the debit side , receipts of cash and checks are recorded, that is, items that increase the cash balance or the bank balance. On the credit side, payments of cash and checks are recorded, that is, items that decrease the cash balance or the bank balance .

A contra entry in the cash book is one which does not require further entries in other ledger accounts. This is because for the given transaction, both entries are made in the cash book itself, the transaction affecting both the cash account and the bank account. Transaction recorded on both debit and credit side of cash book is known as contra entry.