Question

What do you understand by contra transaction?

Answer 1

answer:

Contra Entry according to me is,

If a transaction requires entries on both the debit and the credit sides simultaneously, it is called 'Contra entry'.

Usually, the contra entries will appear in the following occasions.

a. When an account is opened with a bank.

b. The firm's cash is deposited in the bank.

c. The cash is withdrawn from bank for office use.

d. The cheques received from debtors, are deposited in the bank.

In transactions a&b, the cash balance available with the firm is decreased, the cash in bank is increased. In transaction 'c', the cash in the bank is decreased and the cash in the firm is increased.