Contra Entry Quiz

What is a contra entry in accounting?

• A contra entry in accounting is a transaction that increases the effect of a previous transaction.

• A contra entry in accounting is a transaction that is recorded in the wrong account.

• A contra entry in accounting is a transaction that offsets or cancels out the effect of a previous transaction.

• A contra entry in accounting is a transaction that has no effect on the financial statements.

What is the purpose of a contra entry?

• To reverse or cancel out a previous entry

• To increase the value of a previous entry

• To correct a mistake in a previous entry

• To record a new entry

Explain the accounting treatment for contra entry.

• The accounting treatment for contra entry involves recording an equal and opposite entry to the original entry, typically in the same account or ledger.

• The accounting treatment for contra entry involves recording a larger amount in the opposite direction of the original entry.

• The accounting treatment for contra entry involves recording a smaller amount in the opposite direction of the original entry.

• The accounting treatment for contra entry involves recording a different entry in a different account or ledger.

When is a contra entry recorded in the books of accounts?

• When there is a transfer of funds between two different persons or entities.

• When there is a transfer of funds between two accounts of the same person or entity.

• When there is a transfer of funds between two different banks.

• When there is a transfer of funds between two different accounts of the same person or entity.

What are the two accounts involved in a contra entry?

• cash account and bank account

• assets account and liabilities account

• revenue account and expense account

• sales account and purchase account

Give an example of a contra entry.

• Reversal of an incorrect payroll entry

• Reversal of an incorrect sales entry

• Reversal of an incorrect expense entry

• Reversal of an incorrect purchase entry

How does a contra entry affect the trial balance?

• It has no effect on the trial balance.

• It increases the impact of the original incorrect entry.

• It reduces or eliminates the impact of the original incorrect entry and restores the balance in the affected accounts.

• It only affects the balance in one account.

What is the journal entry for a contra entry?

• Debit one account and credit another account in equal amounts.

• Credit one account and debit another account in equal amounts.

• Do not record any entry for a contra entry.

• Debit one account and credit another account in unequal amounts.

What is the difference between a contra entry and a regular journal entry?

• A contra entry is used to record financial transactions or events, while a regular journal entry is used to reverse or cancel out a previous entry.

• A contra entry and a regular journal entry are the same thing.

• A contra entry is used for non-financial transactions, while a regular journal entry is used for financial transactions.

• A contra entry is used to reverse or cancel out a previous entry, while a regular journal entry is used to record financial transactions or events.

Why is it important to record contra entries accurately?

• To prevent fraud and misappropriation of funds.

• To comply with legal and regulatory requirements.

• To ensure accurate financial statements and maintain the integrity of accounting records.

• To facilitate accurate reconciliation of accounts.