In Simple wOrds ..

>A cOntra enTry is an enTry which r recOrded tO reverse ..
If a debit entry is recorded in an account, it will be recorded on the credit side and vice-versa.

> fOr ex -
when cash is deposited to bank, It is just moving of fund (current asset) from cash account to bank account..!!

**Contra Entry: Definition and Explanation**

A contra entry, also known as a contra account, is a double-entry accounting entry that records the opposite side of a previous entry in order to reverse or correct it. It is used to eliminate the impact of a transaction without disturbing the overall balance of accounts. Contra entries are typically used to rectify errors, cancel out incorrect transactions, or adjust balances.

**Example of Contra Entry**

Let's consider an example to understand contra entries better:

Suppose a company mistakenly recorded a sales transaction of $1,000 in the sales ledger. This entry should have been recorded in the purchases ledger as an expense. To correct this error, a contra entry is made as follows:

1. **Sales Ledger Entry:**
- Debit: Sales Account - $1,000
- Credit: Accounts Receivable - $1,000

2. **Contra Entry:**
- Debit: Accounts Receivable - $1,000
- Credit: Sales Account - $1,000

By recording the contra entry, the original sales entry is reversed, and the error is rectified. The sales account is credited, and the accounts receivable account is debited, canceling out the incorrect entry and maintaining the overall balance of accounts.

**Explanation of Contra Entry**

1. **Purpose of Contra Entry:**
- Contra entries are used to reverse or correct errors in accounting transactions.
- They help maintain accurate financial records by eliminating incorrect entries.

2. **Double-Entry System:**
- Contra entries follow the double-entry accounting system, ensuring every debit has a corresponding credit and vice versa.
- They maintain the fundamental accounting equation: Assets = Liabilities + Equity.

3. **Types of Contra Entries:**
- Reversing Entries: These contra entries reverse the effect of an original entry made in the previous accounting period.
- Correcting Entries: These contra entries rectify errors made in the same accounting period.

4. **Common Examples of Contra Entries:**
- Cash deposited into the bank: A contra entry is made by debiting the bank account and crediting the cash account.
- Cash withdrawn from the bank: A contra entry is made by debiting the cash account and crediting the bank account.

5. **Importance of Contra Entries:**
- Contra entries maintain accurate financial records by correcting errors promptly.
- They ensure the integrity of financial statements, providing reliable information for decision-making.

In conclusion, a contra entry is a crucial tool in accounting that helps rectify errors, reverse incorrect transactions, and maintain accurate financial records. It follows the double-entry system and is essential for maintaining the overall balance of accounts.