If you are a student or professional dealing with accounting, you know that managing cash and bank transactions is the daily routine. But one specific transaction category often causes confusion: the Contra Entry. contra entry in books

A Contra Entry is unique because it is the only transaction that is recorded on both the debit and credit sides of the Cash Book. This “opposite” nature is essential to prevent errors and ensure accurate bank reconciliation.

Understanding this concept is non-negotiable for accounting proficiency. Whether you are aiming for a stable Accounts Executive job or running your own Tally system in Kolkata, mastering the Contra Entry (and the unique “C” marking) is your key to maintaining a clean ledger.

This guide breaks down exactly what a Contra Entry is, the two key types you must know, and how to execute it perfectly using Tally Prime.

What is a Contra Entry in the Three-Column Cash Book? contra entry in books

A Contra Entry is a specialized transaction that records the internal transfer of funds between the cash account and the bank account belonging to the same business entity.2

The term “Contra” literally means “opposite”.2 It is characterized by three key facts:

  1. Dual Effect: It affects both the cash and bank columns of the Cash Book simultaneously.2
  2. Self-Balancing: Since money is only moving from one asset (Cash) to another asset (Bank), the total financial position of the business remains unchanged.2
  3. The “C” Mark: It is clearly marked with the letter ‘C’ (for Contra) in the Ledger Folio (L.F.) column on both the debit and credit sides, signifying that no further posting to the ledger is required.2

The sole purpose of this entry is to accurately track internal movement of funds, ensuring the balance sheet and the accounting equation remain intact.2

The Two Essential Types of Contra Entries contra entry in books

The Contra Entry is only used for two common types of internal transfers. You must know the dual effects of each:

Type 1: Cash Deposited Into the Bank

This occurs when cash is physically taken from the business’s cash till and deposited into the company’s bank account.

  • Debit (What comes in): The Bank account balance increases (debit the Bank column).
  • Credit (What goes out): The Cash balance decreases (credit the Cash column). 2
DateParticularsL.F.Cash (₹)Bank (₹)(Credit Side) DateParticularsL.F.Cash (₹)Bank (₹)
DebitTo CashC15,000CreditBy BankC15,000
Bank A/c Dr (Asset ↑)Cash A/c Cr (Asset ↓)

Type 2: Cash Withdrawn From the Bank for Office Use contra entry in books

This occurs when money is withdrawn from the bank (via ATM or cheque) to be used for daily cash expenses in the office.

  • Debit (What comes in): The Cash balance increases (debit the Cash column).
  • Credit (What goes out): The Bank account balance decreases (credit the Bank column). 2
DateParticularsL.F.Cash (₹)Bank (₹)(Credit Side) DateParticularsL.F.Cash (₹)Bank (₹)
DebitTo BankC8,000CreditBy CashC8,000
Cash A/c Dr (Asset ↑)Bank A/c Cr (Asset ↓)

Step-by-Step Guide: Contra Entry in Tally Prime contra entry in books

In modern workplaces, you will execute this entry using software. Tally Prime simplifies this process by providing a dedicated voucher type and automation.

  1. Select the Voucher: From the Gateway of Tally, press V for Vouchers.
  2. Open Contra Voucher: Press F4 to select the Contra Voucher type.
  3. The Credit Entry (What is Reduced): Enter the account that is losing the money first (Credit).
    • If Depositing: Select the Cash Ledger and enter the amount.
    • If Withdrawing: Select the Bank Ledger and enter the amount.
  4. The Debit Entry (What is Increased): Enter the account that is receiving the money next (Debit).
    • If Depositing: Select the Bank Ledger.
    • If Withdrawing: Select the Cash Ledger.
  5. Bank Details: If the entry involves a bank, Tally will prompt you for the Denomination Details (for cash deposit) or the Cheque/ATM Details (for withdrawal).
  6. Save: Press Ctrl + A to accept and save the voucher.

Tally automatically handles the debit/credit logic and generates the corresponding Contra entries, ensuring perfect Bank Reconciliation—a skill highly demanded in every Accounts Executive job profile. 3

Conclusion: Accuracy and Efficiency

Mastering the Contra Entry is vital for accurate financial reporting and compliance.2 It ensures transparency, prevents errors like double-counting, and is a foundational skill expected by employers.

If you are a commerce student or a professional aiming to handle the day-to-day books of a business, mastering these practical skills in Tally Prime and Advanced Excel is the fastest path to job security and high income.4

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contra entry in books
contra entry in books