Contra entry, explained the simple way.

What is a contra entry?

A contra entry is a transaction where the debit and the credit both belong to the same business's own cash and bank — nothing else is involved. The two everyday examples are depositing cash into the bank, and withdrawing cash from the bank for office use. Because both halves of the entry — the debit and the credit — live inside the same cash book (one on the cash column, one on the bank column), there is no outside party and no separate ledger account to post to.

The word "contra" simply means against or opposite — a contra entry records money moving from one of your own accounts to the other, not into or out of the business at all.

The rule: how a contra entry is recorded and marked

A contra entry only arises in a cash book that tracks both cash and bank together — a double or triple column cash book. It follows one strict rule:

Both lines of a contra entry are written in the same cash book, on the same date — one on the debit (receipts) side in the Bank or Cash column, and one on the credit (payments) side in the other column. Instead of writing a ledger folio number in the L.F. (Ledger Folio) column, you write the letter "C" on both lines. That "C" is a signal to anyone reading the book: this entry is already complete — do not post it to any ledger account.

Every other line in the cash book (a sale, a payment of rent, a receipt from a customer) still needs its opposite leg posted to that account in the ledger. Contra entries are the one exception, because the cash book already is both the Cash account and the Bank account — writing the debit in one column and the credit in the other completes the double entry on the spot.

Live worked example — a double column cash book

Meet Priya Enterprises, a small trading firm in Indore. Below is its double column cash book for June 2026, with two contra entries — cash of ₹10,000 deposited into the bank on 8 June, and ₹4,000 withdrawn from the bank for office cash on 20 June. Notice each contra entry appears twice, both legs marked "C", and involves no other account at all.

Check the tie-out: on the Cash column, receipts of ₹12,000 + ₹18,000 + ₹4,000 = ₹34,000 exactly match payments of ₹10,000 + ₹24,000 (balance carried down) = ₹34,000. On the Bank column, receipts of ₹60,000 + ₹10,000 = ₹70,000 exactly match payments of ₹8,000 + ₹4,000 + ₹22,000 + ₹36,000 (balance carried down) = ₹70,000. Priya Enterprises closes June with ₹24,000 in cash and ₹36,000 in the bank — both columns balance independently.

Notice what did not happen: the ₹10,000 deposit and the ₹4,000 withdrawal never touched any account outside this cash book. No "Bank Deposit A/c" or "Cash Withdrawal A/c" exists anywhere in the ledger — the "C" marking on both legs is the whole double entry, done. Only the 4 June sale and the 25 June payment to Suresh & Co. need their opposite leg posted to the Sales and Suresh & Co. ledger accounts.

Common mistakes & student tips

• Posting a contra entry to the ledger anyway. This is the single most common student error — if you open a "Bank A/c" or "Cash A/c" in the ledger and post the contra entry there too, you've recorded the same transaction twice. The "C" means stop — nowhere else to post.
• Writing a folio number instead of "C". A folio number points to a page in the ledger. A contra entry has no ledger page to point to, because both legs already live in the cash book — always write "C", not a number.
• Confusing a contra entry with a bank transfer to another party. Moving your own cash to your own bank is a contra entry. Paying a supplier by cheque or NEFT is not — it's a normal payment, credited to Bank and debited to the supplier's account (or an expense account), and it does need posting.
• Forgetting a contra entry needs a double column (or triple column) cash book. A single column cash book tracks cash only — there is no bank column for the other leg of a contra entry to sit in, so contra entries simply cannot appear there.
• Assuming contra entries change your total funds. They don't. Whether ₹10,000 sits in the till or in the bank, the business is equally well off — a contra entry only moves money between two columns of the same cash book, it never adds to or reduces total cash-plus-bank.

In TatvaBooks, this happens automatically

Marking contra entries by hand teaches you exactly why cash and bank move together without touching the ledger — and every accountant should understand it. But in a real business, a bank deposit or a cash withdrawal needs to be recorded correctly the moment it happens, with no risk of it being posted twice by mistake. In TatvaBooks, when you record a cash deposit into the bank or a cash withdrawal from the bank, the system automatically treats it as a contra transaction — both legs are posted between your Cash and Bank ledgers instantly, and nothing is left for you to post separately or accidentally duplicate.

It's built by Chartered Accountants for Indian businesses, and it's free to start on the Solo plan. See how your cash book stays balanced for you on our cloud accounting software and features pages.

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