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Contra Entries

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Mohanraj J

781 Points Posted on 02 July 2020

Dear Friends,
Shall we pass JV instead of Contra?

Replies (6)

Quick Summary

This discussion explores whether to use journal vouchers (JV) instead of contra entries in accounting software, specifically within the context of Epicor ERP. While contra entries are often associated with banking transactions in systems like Tally, the consensus is that JVs can be used for a wider range of adjustments. The key challenge highlighted is how to present these entries to auditors when the ERP system lacks specific modules for direct expenses or contra entries. It's suggested that ERPs like Epicor function by recording all transactions in a journal voucher mode, and contra entries are primarily for nullifying transactions.

yasaswi gomes

My grammar is 💯 good I

5110 Points Posted on 02 July 2020

Is this related to Tally? If so, contra entries are used only for banking transactions.

If your using journal voucher entries in normal accounting terms, it is fine because all entries are usually journal entries. Once in a while, you have to reduce the value of something like for example, bad debts allowance created from receivables. You credit receivables and create bad debts allowance by debiting it in the asset side, another example is, purchase returns. Usually these entries are related a particular account, There is no hard core rule that only bank and cash accounts can be used for contra entries.

Mohanraj J

781 Points Posted on 02 July 2020

We are not using Tally. We are implementing EPICOR ERP Software, in that Software no option for Contra Entries as well direct expenses entries like Salary Payable, TDS, ESI, PF etc. If we posted all these entries under JV then how do we give the same to our Auditor?

yasaswi gomes

My grammar is 💯 good I

5110 Points Posted on 02 July 2020

Hi, nothing to worry about. I just checked out this software details, and it has functionality similar to other ERP’s. So, finally only tally has the facility to work on journal voucher or transaction entry modes. Although I’m just an enthusiast, I have a hunch that you will be working on ledger accounting as per the records created in Epicor. That means recording transactions in separate books for everything and of course it will be in journal voucher mode where there will be lines and one has to fill out the details like debit or credit amounts. Contra entries will be necessary when you are nullifying a transaction.