A contra entry is a transaction that involves both a debit and a credit entry which offset each other, resulting in a net zero effect on the account balances. Contra entries are typically used to correct errors, transfer funds between accounts, or record non-cash transactions. For example, if a company transfers funds from its checking account to its savings account, a contra entry would be made to reflect the decrease in the checking account balance and the increase in the savings account balance. Contra entries are also commonly used in the context of intercompany transactions to eliminate the impact of transactions between related entities.

Withum Smith+Brown Interview Questions: What is contra entry

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What is contra entry

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A contra entry is a transaction that involves both a debit and a credit entry which offset each other, resulting in a net zero effect on the account balances.