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.
Note that the Balance Sheet is not affected with the result of the above entry as the cash flow is between two asset accounts.
Reconciliation is the process of comparing a bank statement with the bank ledger (chart of account) entries to correct any discrepancy in the book of accounts. All the companies perform reconciliation to ensure that the accounting is in line with the ...
Recurring Journal is an accounting entry which is repeated periodically in some cases. Recurring journals is required for recording transactions like salary, amortization, recurring purchases, recurring sales etc., The same entries with the same ...
A Ledger is a book where journal entries are posted into individual ledger accounts in a chronological order. A ledger account is maintained to calculate the account balances at the end of every month and to summarize the financial information from ...
Trial Balance is a statement which contains the closing balances of all the ledger accounts as of a particular date. It has two sides: debit and credit to enter the respective closing balances of ledger accounts. The main purpose of running a trial ...
Double Entry System
Double Entry is a method of accounting in which every transaction affects two accounts equally and correspondingly. That means one account’s value will increase and another account’s value will decrease at the same time. For example, an accounting ...