Contra Entry: Meaning, Examples & Contra Voucher
Definition
A contra entry is a transaction between cash and bank accounts of the same business — such as cash deposited into the bank or cash withdrawn for office use — where both the debit and the credit side are cash or bank.
| Term | Contra entry |
|---|---|
| In Hindi | कॉन्ट्रा प्रविष्टि |
| Area | Accounting |
| Search phrase | contra entry |
| Try it | Journal entries |
कॉन्ट्रा प्रविष्टि — हिंदी में अर्थ
कॉन्ट्रा प्रविष्टि वह लेन-देन है जो एक ही व्यवसाय के नकद और बैंक खातों के बीच होता है — जैसे बैंक में नकद जमा करना या कार्यालय के लिए बैंक से नकद निकालना। इसमें डेबिट और क्रेडिट दोनों तरफ नकद या बैंक खाता ही होता है।
The four common contra entries
1. Cash deposited into bank: Bank A/c Dr; To Cash A/c. 2. Cash withdrawn from bank for office use: Cash A/c Dr; To Bank A/c. 3. Transfer from one bank account to another: Receiving Bank A/c Dr; To Paying Bank A/c. 4. Cheque received and deposited the same day is often booked straight to the bank — no contra needed.
In a three-column cash book, a contra entry appears on both sides — in the cash column on one side and the bank column on the other — and is marked 'C' in the ledger folio column, so it is not posted to the ledger again.
What is not a contra entry
Anything that touches a third account is not a contra. Bank charges (Bank Charges A/c Dr; To Bank A/c), interest credited by the bank, or paying a supplier by cheque are ordinary payment or receipt entries. In accounting software, contra entries are passed in a separate contra voucher type so they do not show up as income or expense.
Example
Shop takings of ₹85,000 are deposited into the current account on Monday: Bank A/c Dr ₹85,000; To Cash A/c ₹85,000 (being cash deposited into bank). Total assets do not change — only their form does.
Related tools and guides
Frequently asked questions
What is a contra entry in simple words?
An entry where money only moves between your own cash and bank accounts — deposits, withdrawals and transfers between your bank accounts.
Is withdrawal of cash for personal use a contra entry?
No. Cash taken for personal use is drawings: Drawings A/c Dr; To Bank A/c. A contra entry is cash withdrawn for the business.
Why is contra entry marked C?
Because both sides are already in the cash book, 'C' in the L.F. column tells the accountant not to post it to a ledger again.
Does a contra entry affect profit?
No. It only converts cash to bank or bank to cash, so it changes neither income nor expense.
Related terms
- Accounts receivableAccounts receivable is the money customers owe a business for goods or services already supplied on credit. It is shown as trade receivables (debtors) under current assets.
- Accrual vs cash basis of accountingUnder the accrual (mercantile) basis, income and expenses are recorded when they are earned or incurred, whatever the payment date. Under the cash basis, they are recorded only when cash is actually received or paid.
- Balance sheetA balance sheet is a statement of what a business owns (assets) and what it owes (liabilities and owners' equity) on a particular date. Total assets always equal total equity plus liabilities.
- Cash conversion cycleThe cash conversion cycle (CCC) is the number of days between paying for raw material and collecting cash from the customer for the finished goods: days inventory outstanding plus days sales outstanding minus days payables outstanding.
- Contribution marginContribution margin is selling price minus variable cost. It is the amount each sale contributes first towards fixed costs and then to profit; as a percentage of sales it is called the contribution margin ratio or P/V ratio.
- Cost of goods sold (COGS)Cost of goods sold (COGS) is the direct cost of the goods a business sold in a period: Opening stock + Purchases + Direct expenses − Closing stock.