Q.Explain about contra entry with example.
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Start your 14-day free trial to unlock the full solution →A contra entry affects both the cash and bank columns of the cash book at the same time; it is written on both sides and marked 'C', requiring no ledger posting.
Meaning: When a transaction affects both cash and bank accounts, and both are maintained in the same (two-column or three-column) cash book, the entry is recorded on both sides of the cash book. Such an entry is called a contra entry. The letter 'C' is written in the Ledger Folio (L.F.) column to indicate it, because no posting to a separate ledger is needed — both accounts are inside the cash book.
When contra entries arise:
- Cash deposited into the bank.
- Cash withdrawn from the bank for office use.
Example — Cash of ₹5,000 deposited into the bank:
| Side | Particulars | Cash ₹ | Bank ₹ |
|---|---|---|---|
| Debit (receipts) | To Cash A/c (C) | 5,000 | |
| Credit (payments) | By Bank A/c (C) | 5,000 | |
| … |
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