What are the implications of allocating a payment in one cash book to another cash book as a contra

[LouisaEls]

What are the implications of allocating a payment in one cash book to another cash book as a contra (instead of using a transfer account)?

[CindyEvansFinney]

What are the implications of allocating a payment in one cash book to another cash book as a contra (instead of using a transfer account)?

Hi Louisa, Something that I find works best is:
Set up another bank account for example "Transferring Account" .

1. First Account - example 8410/000
If this account transfers money to 8420 then allocate it to the Transferring Account - example 8430

2. Second Account - example 8420/000
This account will then receive that money from 8410. Also allocate this to 8430

You will then see a credit from first account in 8430 and a debit from second account in 8410 - therefore the two contra each other out.

The only reason why I stopped doing the transfers directly to another account is because it is easy to forget which account you used to do the transfer - the cash book print out also won't show the "receipt" in the second account. you will only see it in the ledger detail.

Having a transferring account really helps to reconcile each month if there are a lot of transfers to and from bank accounts. It should effectively always be zero.