Question 2

What is the purpose of contra entry?


When cash is deposited into the bank or when cash is withdrawn from the bank for use in the office, each such transaction affects both ‘Cash Column’ as well as ‘Bank Column’ and the transaction is therefore recorded on both sides of the cash book. Such entries, the double entry of which is complete in the Cash Book itself, are called "Contra entries.

Contra Entries are those entries which take place between bank and cash. In this case when cash is deposited in the bank and when cash withdrawal for office use from the bank, both the entries are posted in Cash Book and letter ‘C’ is written in Journal Folio(Jf) column so that these entries are not posted to the ledger account further.

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