Question

Explain the counter entry in cash book? Explain why and when it did?

Answer 1

contra entries are the one which effect the cash book on both sides I.e debit and credit sides. in the following cases contra entries are made

: when cash is deposited in bank

: when cash is withdrawn from bank for official purposes

reason for contra entries : as we know debit is what comes in and credit side is what goes out .so taking the example of cash deposited in bank here cash is going out of business so it is credited and in bank column in debit side cash is coming in.

this results in appearance on two sides of cash book.

hope u understand