Contra entries
A contra entry records a transaction affecting two related accounts within the same set of records. In a cash book, a transfer between cash and bank appears on opposite sides without changing total cash held. In receivables and payables, an agreed set-off reduces balances owed by and to the same counterparty. Identify the context before posting.
Worked example
Banking $300 from the till debits bank and credits cash. An agreed $200 customer-supplier set-off debits payables and credits receivables.
Common mistake
A contra is not automatically income or expense, and unrelated customer and supplier balances cannot simply be offset at will.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Supporting | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Supporting | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |