Let’s start with something you already know from daily life.
You have a wallet with cash, and you also have a bank account. When you run out of cash, you go to an ATM, withdraw money from your bank, and put that cash into your wallet. From your personal point of view, your total money hasn’t changed — you just moved some from the bank to your pocket. But in your own records, you’d note: “Bank decreased, Cash increased.” That’s a single transaction affecting two things you own.
In accounting, a contra entry is exactly that — a transaction that affects both sides of a double-entry but stays within the same class of accounts (both are real accounts, both are assets or both are liabilities). The word “contra” means “against” or “opposite.” Here, it means one asset is reduced and another asset is increased, or one liability is reduced and another liability is increased. No third party (like a customer or supplier) is involved.
The most common example in Class 12 is cash deposited into the bank or cash withdrawn from the bank for office use. Both are movements between Cash and Bank — two current assets. Because both accounts appear on the same side of the balance sheet, the entry is recorded in a special column of the Cash Book (the Triple Column Cash Book), not in the Journal Proper.
Why does it matter?
If you recorded a cash deposit into the bank as a normal journal entry (Dr Bank, Cr Cash), you’d be doing double work — the Cash Book already tracks both cash and bank columns. A contra entry avoids duplication. It also keeps the Cash Book self-contained: you can see at a glance how much cash moved to or from the bank without flipping pages.
In exams, the purpose is tested in two ways:
- Identifying whether a given transaction is a contra entry.
- Showing the correct treatment in the Triple Column Cash Book (with a special marking, usually ‘C’ in the folio column).
Accounting treatment
For a contra entry, the rule is simple:
Debit the account that receives the benefit, Credit the account that gives the benefit.
But since both accounts are in the Cash Book itself, you don’t write a separate journal. Instead, you enter the amount twice in the Cash Book:
- In the Cash column on the debit side (if cash is increasing) or credit side (if cash is decreasing).
- In the Bank column on the opposite side.
Let’s see the two standard cases.
Case 1: Cash deposited into bank
- Cash decreases → Credit side of Cash Book (Cash column).
- Bank increases → Debit side of Cash Book (Bank column).
In the Cash Book, it looks like this (only the relevant row):
| Date | Particulars | V.No. | L.F. | Cash (Dr) | Bank (Dr) | Date | Particulars | V.No. | L.F. | Cash (Cr) | Bank (Cr) |
|---|
| | | C | | ₹5,000 | | Bank | | C | ₹5,000 | |
The ‘C’ in the L.F. column marks it as a contra entry.
Case 2: Cash withdrawn from bank for office use
- Bank decreases → Credit side of Cash Book (Bank column).
- Cash increases → Debit side of Cash Book (Cash column).
| Date | Particulars | V.No. | L.F. | Cash (Dr) | Bank (Dr) | Date | Particulars | V.No. | L.F. | Cash (Cr) | Bank (Cr) | …