A contra entry is an accounting entry that affects both cash and bank accounts. It is recorded when the debit and credit affect the same parent account and result in a net zero effect to the account. Contra entries are used to indicate transactions that affect both cash and bank balances, and they do not affect the financial positions of a business.

Contra entries are recorded in both sides of a triple column cash book in cash and bank columns and are denoted by C in the ledger folio column. Examples of contra entries include withdrawing cash from an ATM, depositing cash into a bank account, transferring money from one bank account to another, and transferring cash from one cash account to another.

Contra accounts are also used in a general ledger to reduce the value of a related account when the two are netted together. The natural balance of a contra account is the opposite of the associated account, and it is presented on the same financial statement as the associated account, typically appearing directly below it with a third line for the net amount. Examples of contra accounts include accumulated depreciation and allowance for doubtful accounts.

In summary, a contra entry is an accounting entry that affects both cash and bank accounts, and it is recorded when the debit and credit affect the same parent account and result in a net zero effect to the account. Contra entries are used to indicate transactions that affect both cash and bank balances, and they do not affect the financial positions of a business. Contra accounts are also used in a general ledger to reduce the value of a related account when the two are netted together.