Question

What is a contra entry? How can you deal with this entry while preparing a double column cash book?

Answer 1

An entry that is recorded to reverse an entry on the opposite side of an account is called contra entry. For example, when a debit entry gets recorded in an account, a contra entry will be posted in the credit side. Similarly a contra entry will be posted in debit side if an entry gets recorded in credit side.

Some transactions that can lead to contra entry are provided below.

1. Opening of a bank account
2. Depositing cash into bank
3. Withdrawal from bank

These transactions are recorded in a double column cash book.