CSEET · Fundamentals of Accounting · Accounting Process
A cash book has columns for cash, bank and discount. Mehta Traders deposits cash of ₹20,000 into its bank account. How is this entry recorded?
The bank column is debited and the cash column is credited. Depositing cash raises the bank balance and reduces cash in hand. Because both accounts are in the cash book, it is a contra entry, marked with the letter C in the ledger folio column.
- ARecorded on the debit side in the bank column and on the credit side in the cash columnCorrect
- BRecorded on the debit side in the cash column and on the credit side in the bank column
- CRecorded on the debit side of both the cash and bank columns
- DRecorded on the credit side of both the cash and bank columns
Explanation
Depositing cash into the bank increases the bank balance (debit bank) and reduces cash in hand (credit cash). This is a contra entry, with both effects in the same book. Option B reverses it, which would represent a withdrawal from bank.
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