Explain the counter entry in cashbook and explain why and when it did
Answers
It is a separate book in which cash transactions are directly recorded. It is an account in a Ledger in which posting is made from journal. It serves the purpose of both journal and ledger and hence cash transactions need not be primarily recorded in Journal.
Counter entries are transaction records which are entered on both sides of the cashbook.
These types of entries are marked in the cashbook as “C” that does not require further posting in any other account.
Counter entry is done when there is the requirement of making two entries by following the principle of double entry.
Generally, payment is done in the bank by cash and receipt.
Therefore, the record should be entered on the cash column for credit and also on the bank column for debit.
By marking “C” in the folio column it will mean that no further posting of transaction is necessary.