A contra entry is recorded when the debit and credit affect the same parent account and resulting in a net zero effect to the account. These are transactions that are recorded between cash and bank accounts.
For example, a company withdraws cash from the bank account to meet its daily expenses and this entry is recorded as follows: cash Account is debited while the Bank account is credited.
Note that the Balance Sheet is not affected with the result of the above entry as the cash flow is between two asset accounts.
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