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.

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.

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Note that the Balance Sheet is not affected with the result of the above entry as the cash flow is between two asset accounts.