Contra entries are passed only when:

Explanation:
Contra entries refer to the transactions that involve both cash and bank accounts in the same entity. These entries are recorded in the cash book and are used to reflect the movement of funds between the cash account and the bank account. There are different types of cash books used to record these transactions, including the double column cash book, three-column cash book, and simple cash book.

- Double column cash book: The double column cash book has two columns, one for cash transactions and the other for bank transactions. It is used when both cash and bank transactions are recorded in the same cash book. Contra entries are passed in this cash book when there is a transfer of funds between the cash account and the bank account.

- Three-column cash book: The three-column cash book has three columns, one for cash transactions, one for bank transactions, and one for discount allowed or received. It is used when both cash and bank transactions are recorded in the same cash book, along with discounts. Contra entries are passed in this cash book when there is a transfer of funds between the cash account and the bank account.

- Simple cash book: The simple cash book has only one column and is used to record either cash transactions or bank transactions. It is not used to record both cash and bank transactions in the same cash book. Therefore, contra entries cannot be passed in the simple cash book.

Conclusion:
Contra entries are passed only when a three-column cash book is prepared. The three-column cash book allows for the recording of both cash and bank transactions, along with discounts. This type of cash book is used when there is a need to record the movement of funds between the cash account and the bank account, making it suitable for passing contra entries.