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what is contra entry


Dear All,

Could you please explain me, what is CONTRA entry?

 
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Chartered Accountant


It is better to say Contra is an adjustment entry, because it doesn't affect your Net Cash Balance.(whether cash in hand or bank, your current asset will be the same)

Following are the Transactions- to be accounted under the Contra.

* Cash deposited in the Bank,
* Cash Withdrawn from the Bank.

By Accounting Principle,
For, Cash Withdrawn from the Bank
Debit- What Comes in, - CASH
Credit- The Givert - BANK

fOR, Cash deposited in the Bank
DEBIT- THE RECEIVER - BANK
CREDIT- WHAT GOES OUT- CASH

NOTE:
1.Cash is the REAL A/c,
2.Bank is the PERSONAL A/c

 
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the entry which is posted on both sides of cash book

 
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pcc student


can u explain how bank is personal a/c?

 
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bank is an institution, having a separate legal identity under Banking regulation Act 1949. hence Bank A/c is a personal A/c and not a real A/c.

 
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Bank is a place which has accepted your offer of depositing money into its hands. When people deposit money in their bank accounts, banks are liable to return it back to the depositers on their demand or payment has to be made by Banks to parties who present the cheques issued by you.

By this, the Bank merely acts as an agent by handling your money. It is as good as you handling your money as per your wish.That is why Bank Account is a Representative personal account.

 
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Chartered Accountant


By Accounting Concepts, BANK is a Place, Where you Saved and treasured your money. So, by default bank becomes as a person for your Operations. To cut the Long Story, Bank is a Current Asset, if it has DEBIT balance in your Books. By Nature it becomes as PERSONAL A/c, Since it ia a STATUTORY person.

 
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(Guest)

contra entry is that entry where where both the real a/cs are debited or credited , cash or bank vice versa the contra should be made between cash to bank or bank to another bank or same bank to another a/c

 
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What is contra entry? is it effect only cash & bank a/c?Please email on accountsbaddi @ cipla.com

 
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