Contra Entries | Accounting Dictionary (2024)

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Contra Entries | Accounting Dictionary? ›

A contra entry is recorded when the debit and credit affect the same parent account and resulting in a net zero effect to the account. These are transactions that are recorded between cash and bank accounts.

A contra entry is an entry that is recorded when both the debit and credit affect the same account and which results in a net-zero effect on the account. These transactions are recorded between bank and cash accounts.

Contra entry refers to transactions involving cash and bank account. In other words, any entry which affects both cash and bank accounts is called a contra entry. Contra in Latin means the opposite. It is more popularly known as contra voucher.

A major example of a contra account is an allowance for doubtful accounts. This contra asset reduces the balance of gross accounts receivable by an estimate of how many receivables will go uncollected. Notice on Amazon's balance sheet that the balance of accounts receivable is noted as being a net amount.

A contra expense account is a general ledger expense account that will intentionally have a credit balance (instead of the debit balance that is typical for an expense account). In other words, this account's credit balance is contrary to (or opposite of) the usual debit balance for an expense account.

Transaction recorded both on debit and credit side of cash book is known as contra entry.

The accounting system is known as double-entry accounting because every transaction made by a corporation affects two or more accounts. Transactions involving cash and a bank account are referred to as contra entries. In other words, a counter entry is any entry that has an impact on both bank accounts and cash.

Which key is used for contra entry? ›

Definition of 'contra account'

A contra account is an account with a balance that is the opposite of the normal balance of a related account. An account that reduces a related account is known as a contra account. Book depreciation is the contra account to the asset that is being depreciated on the balance sheet.

contra-¹. a prefix meaning “against,” “opposite,” “opposing”: contradistinction, contraindicate.

For example, a company withdraws cash from the bank account to meet its daily expenses and this entry is recorded as follows: cash Account is debited while the Bank account is credited. Note that the Balance Sheet is not affected with the result of the above entry as the cash flow is between two asset accounts.

Contra Account Examples

The most common examples of contra-accounts are the following: Contra Asset: Accumulated Depreciation, Allowance for Doubtful Accounts. Contra Liability: Financing Fees, Original Issue Discount (OID) Contra Equity: Treasury Stock.

The contra account is a holding account designed for situations where money comes into your bank account and then goes straight back out, or vice versa. For example, a bounced cheque or money paid to the business in error and then refunded.

contra account in Accounting

A contra account is an account with a balance that is the opposite of the normal balance of a related account. An account that reduces a related account is known as a contra account. Book depreciation is the contra account to the asset that is being depreciated on the balance sheet.

1. : against : contrary : contrasting. contradistinction. 2. : pitched below normal bass.

preposition. against; in opposition or contrast to: Consider the problems of the teenager contra those of the adult.