Question

State the meaning of a ‘Contra Entry’ with the help of an example.

Answer 1

Meaning:

• In the dual entry accounting system, a contra entry is an entry which is recorded to reverse or offset an entry on the other side of an account.
• If a debit entry is recorded in an account, it will be recorded on the credit side and vice-versa.
• Contra entry has no ultimate affect in the business.
• When a contra entry is made, the affect is transferred from one account to another.
• But no result is created in the business.

For example:

• When cash is deposited to bank, It is just moving of fund (current asset) from cash account to bank account.

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