Multiple choice

What do you mean by Contra Entry?

  1. When a transaction is recorded on the debit side of the cash book.

  2. When a transaction is recorded on the credit side of the cash book.

  3. When a transaction is recorded on both, debit as well as credit side of the cash book

  4. All of them are correct.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A contra entry occurs when a transaction affects both the cash and bank columns of a double-column cash book. For example, depositing cash into the bank or withdrawing cash from the bank for office use requires an entry on both the debit and credit sides. These entries cancel each other out in terms of the total liquid assets of the business.

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