Contra entries in a cash book are passed only when which type of cash book is prepared?

Introduction / Context:
Contra entries record transactions where both the debit and credit aspects are within the cash book itself, such as cash deposited into the bank or cash withdrawn from the bank for office use. Understanding when contra entries are used is important for basic bookkeeping and exam questions on cash book formats.

Given Data / Assumptions:

• A simple cash book has only one column for cash on each side.
• A double column cash book has separate columns for cash and bank on each side.
• A three column cash book adds a discount column but still includes both cash and bank.
• Contra entries arise when cash and bank accounts are affected in the same transaction.

Concept / Approach:
Contra entries are used when money moves between cash in hand and cash at bank. For such entries, both the cash and bank aspects are recorded within the same cash book. This requires that the cash book contain both cash and bank columns. In exam oriented theory, contra entries are typically introduced with the double column cash book that has cash and bank columns. The key idea is that the transaction is internal to the business cash and bank balances.

Step-by-Step Solution:
Step 1: Consider a simple cash book with only a cash column. Since there is no separate bank column, bank transactions are not recorded here in detail. Step 2: In a double column cash book, there are two columns on each side, one for cash and one for bank, allowing movements between these two to be recorded in a single book. Step 3: Contra entries, such as depositing cash into the bank, result in a decrease in cash and an increase in bank balance, both of which can be recorded within the double column cash book. Step 4: A three column cash book also allows contra entries, but exam questions usually emphasise the presence of both cash and bank columns as the minimum requirement. Step 5: Therefore, the answer that best reflects when contra entries are passed is the double column cash book with cash and bank columns.

Verification / Alternative Check:
If we try to record a contra entry in a simple cash book, the bank account would have to be posted separately in the ledger, and the transaction would not appear fully within the cash book itself. In contrast, a cash book with both cash and bank columns allows a single entry to affect both columns, which is the essence of a contra entry. This confirms that the concept is tied to having both cash and bank columns in the same book.

Why Other Options Are Wrong:
A simple cash book does not include a separate bank column, so contra entries cannot be fully recorded there. While a three column cash book also supports contra entries, the question focuses on the basic condition, which is satisfied by the double column cash book that explicitly contains cash and bank. The option stating that no cash book is required is incorrect because contra entries are a cash book specific concept.

Common Pitfalls:
Learners sometimes think that contra entries require the most complex cash book, such as the three column version, and forget that the essential requirement is simply having both cash and bank columns. Others may incorrectly associate contra entries with discounts, which are not directly related. Remember to link contra entries specifically to transfers between cash and bank.

Final Answer:
Contra entries are passed only when a Double column cash book with cash and bank columns is prepared.