When cash is deposited into the business bank account from the cash in hand, what type of entry is made in the cash book?
Correct answer: A. A contra entry
- A. A contra entry
- B. An opening entry
- C. A closing entry
- D. A rectifying entry
Explanation
The transaction affects two columns of the same cash book: cash decreases and bank increases. It is therefore called a contra entry and is commonly marked with the letter C in the cash book.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
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