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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cash Book, Bank Book, Petty Cash Book, Bank Reconciliation Statement

A firm deposits Rs 15,000 of cash into its bank account. In a double-column cash book this is a contra entry. Which recording is correct?

Deposit of cash into the bank is a contra entry: the bank column is debited and the cash column is credited, each with Rs 15,000, and both are marked C. No ledger posting is needed because both accounts are in the cash book.

  1. ADebit cash column Rs 15,000 and credit bank column Rs 15,000
  2. BDebit bank column Rs 15,000 on the debit side and credit cash column Rs 15,000 on the credit side, both marked CCorrect
  3. CDebit bank column only, Rs 15,000
  4. DCredit both cash and bank columns Rs 15,000

Explanation

Cash goes out, so the cash column is credited. The bank balance increases, so the bank column is debited. Both are marked C for contra, and no ledger posting is needed. Option A reverses the entry, which would suit a cash withdrawal.

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