Transferred to current account from deposit account

Transferring funds from a deposit account to a current account is considered a contra entry in accounting. A contra entry is a transaction that involves both a debit and a credit entry which offset each other, ultimately resulting in no change to the total balance.

Posting of Contra Entry

When transferring funds from a deposit account to a current account, the following posting will occur:

- The deposit account will be credited to reduce the balance in the account.
- The current account will be debited to increase the balance in the account.

This posting ensures that the total balance of the two accounts remains the same, but the funds are effectively moved from one account to another.

Impact on Financial Statements

- The transfer will not impact the total assets or liabilities of the company as it involves internal movements of funds.
- The balance sheet will reflect the same total assets and liabilities before and after the transfer.
- The income statement will not be affected by this transaction as it does not involve revenue or expenses.

In conclusion, transferring funds from a deposit account to a current account is a contra entry that involves debiting the current account and crediting the deposit account. This transaction does not impact the total financial position of the company but simply reflects the movement of funds between accounts.