When deposits are made of Cash in a bank it should properly book as on books of accounts. The way to do this correctly is by making a journal entry. The reason is simple. The bank is getting money and so it goes up. Money is leaving the enterprise so it shrinks. This is the basic logic. Cash deposited into bank journal entry is one of the first journal entries a student or beginner learns in accounting. This keeps a proper track of cash movement and provides an idea about the flow of cash from physical cash to the Bank account. You have already studied in this post with simple words, examples, and various situations. So, if you are a student who is new to accounting, if you are using Tally for the first time, or you are someone doing bookkeeping for a business, this guide is for you.
We will also discuss various other types of journal entry for this entry such as deposit cash into bank journal entry, cash deposited into bank journal entry in tally, journal entry for personal cash deposited into business bank account, etc.
Cash Deposited into Bank Journal Entry
When you deposit cash with a bank, your cash goes down, but your bank balance goes up. This entry will not change your P&L. It does not change the value of your asset.
Basic Journal Entry
Cash and banks are asset accounts in accounting. Cash Out and Bank Balance Increase. The journal entry ends up looking like this:
Journal Entry:
Bank A/c Dr
To Cash A/c
(Deposited into bank)
Split double entry means debit bank account (asset increase) credit cash account (asset decrease). And it is easy—it adheres to the guideline of double-entry accounting.
Why It Matters
For every cash deposit, entry in the bank journal, keeps track of your cash and bank balances. It is important for:
- Preparing cash flow statements
- Matching bank statements
- Internal control and auditing
- Business transparency
Because this can cause mismatch in the accounts, even if there is a small mistake in this journal entry it can confuse the data later.
Cash Deposited into Bank Journal Entry in Different Situations
Different types of situations require you to keep a journal entry for deposit cash into bank. For this, one by one, let us look.
Regular Business Cash Deposit
This is the most common type. You get paid from your customers or sales, and you put that in your bank account.
Journal Entry:
Bank A/c Dr
To Cash A/c
(Being the bank that brings business cash into deposit)
This record is helpful when your business collects cash from customers and makes deposits later.
Bank Journal Entry for Cash Sales Deposited
However, at sales, you either directly deposit the cash to the bank or pay them in hand.
Journal Entry:
Bank A/c Dr
To Sales A/c
(Being cash sales deposited into bank)
Here however, the sale occurs and cash is deposited directly so we do not reflect cash account at all.
Personal Cash Deposited into Business Bank Account Journal Entry
The owner transferring his or her money into the business bank account makes it capital for the business.
Journal Entry
Bank A/c Dr
To Capital A/c
(As personal cash deposited into business bank account)
It is a standard way of entering in small businesses and startups.
Journal Entry of Cash Deposited into Bank in Tally
Tally accounting software is one of the most common software that Indian students, businesses and firms use. Learn how to pass cash deposited into bank journal entry in Tally.
How to Do It in Tally
The remaining steps will guide you for posting the TDS entry.
- Press F4 to Select Contra Voucher
- Select the Bank Account under the Account column
- Choose Cash Account in Particulars
- Please enter amount and narration
- Save the voucher
Sample Format in Tally
Date: 15-Apr-2025
Voucher Type: Contra
Account: Bank of India
Particulars: Cash A/c
Amount: ₹10,000
Narration: Imprisoned cash deposited into bank
Tally also allows you to monitor and also track these entries through the Contra Register, where you will see all cash-to-bank and bank-to-cash entries.
What Happens When You Deposit Cash into Bank – Ledger Effects
When you record the Journal entry of cash deposited into bank affect ledger accounts
| Account | Effect | Type of Account |
| Bank Account | Debit (Increase) | Asset |
| Cash Account | Credit (Decrease) | Asset |
Both are current assets. You are merely moving money from one to another.” So, the total value of assets is unchanged.
Real-Life Example
For example, you deposit ₹5,000 in your HDFC bank account from your business cash.
Journal Entry:
HDFC Bank A/c Dr ₹5,000
To Cash A/c ₹5,000
(Since cash deposited in bank)
Ledger Impact:
- It adds ₹5000 to your bank balance
- Also, its cash on hand will fall by ₹5,000
This entry is very important to keep the cash books, trial balances and final accounts.
Cash Deposited into Bank Journal Entry Common Mistakes
Students and beginners mistakenly record this entry. Let us learn about the frequent mistakes and their solutions.
Common Errors
- Tally wrong voucher—you should use a contra voucher instead of Payment or Receipt.
- Debtors / Creditors instead of Cash selected
- No narration – Good for the future: Narration is one of the basics.
- Depositing it as income– It’s only a transfer, not income.
Relevance to ACCA Syllabus
This is part of the Financial Accounting (FA) syllabus in ACCA. It teaches students how to apply double-entry techniques and principles to business transactions. This understanding is also required in later stages for Audit & Assurance and Financial Reporting papers.
Cash Deposited into Bank Journal Entry ACCA Questions
Q1. What journal entry are made on the cash deposited in the business bank?
A) Bank A/c Dr, To Cash A/c
B) Cash A/c Dr, To Bank A/c
C) Capital A/c Dr, To Bank A/c
D) Sales A/c Dr, To Cash A/c
Answer: A
Q2. If an owner puts personal cash into the business bank account, what is the appropriate entry?
A) Bank A/c Dr, To Drawings A/c
B) Bank A/c Dr, To Capital A/c
C) Bank A/c Dr To Capital A/c
D) Cash A/c Dr, To Bank A/c
Answer: C
Q3. When recording the business and owner’s funds separately, which accounting principle is being used?
A) Going Concern
B) Accrual
C) Entity
D) Prudence
Answer: C
Q4. Which book of prime entry will this transaction be recorded first?
A) Sales Day Book
B) Cash Book
C) Purchase Day Book
D) Journal Proper
Answer: B
Q5. What context is ”Bank” an account type in?
A) Liability
B) Expense
C) Asset
D) Revenue
Answer: C
Relevance to US CMA Syllabus
Exam Format of US CMA — Financial Planning, Performance and Analytics (Part 2) — Students must know how to record internal cash movements, maintain internal control over cash, and understand the impact on financial statements. This kind of resource is helpful for real time planning, budgeting and cash flow analysis.
Cash Deposited into Bank Journal Entry US CMA Questions
Q1. Is A Bank Account A Cost In Management Accounting
A) Current Liability
B) Current Asset
C) Operating Revenue
D) Non-Operating Asset
Answer: B
Q2. What kind of voucher type is used in Tally for cash deposit in bank?
A) Journal Voucher
B) Payment Voucher
C) Contra Voucher
D) Receipt Voucher
Answer: C
Q3. What is impacted when the cash is deposited in the bank?
A) Profit
B) Equity
C) Asset composition
D) Liabilities
Answer: C
Q4. Such entries have significance in cost accounting.
A) To track employee payroll
B) To manage direct materials
C) To control cash flow
D) To identify fixed cost
Answer: C
Q5. It is reported under: In cash flow statement this transaction is reported under:
A) Financing Activities
B) Investing Activities
C) Operating Activities
D) Not reported
Answer: C
Relevance to US CPA Syllabus
Content in this topic is under the Financial Accounting and Reporting (FAR). Recording of banking and cash is significant to cash flow statements, reconciliations, and audit trails. It also assists CPA’s function in internal control and reporting correctness.
Cash Deposited into Bank Journal Entry US CPA Questions
Q1. When cash is deposited into the bank, what happens to total current assets?
A) They increase
B) They decrease
C) No change
D) It becomes non-current
Answer: C
Q2. Which is the correct journal entry when cash deposited into business bank account?
A) Cash A/c Dr, To Bank A/c
B) Bank A/c Dr, To Cash A/c
B) Cash A/c Dr, To GDR Crowne Tax A/c C) Cash A/c Dr, To Revenue A/c
D) Bank A/c Dr; To Capital A/c
Answer: B
Q3. What financial statement will be affected by this transaction the most in the immediate sense?
A) Income Statement
B) Statement of Owners Equity
C) Cash Flow Statement
D) Notes to Accounts
Answer: C
Q4. What type of transaction in the general ledger is this?
A) Asset to Asset transfer
B) Revenue recognition
C) Liability payment
D) Expense reclassification
Answer: A
Q5. When reviewing such bank entries, what type of internal control must be checked?
A) Capital Reserve
B) Source Documents
C) Bank Reconciliation
D) Loan Agreement
Answer: C
Relevance to CFA Syllabus
Candidates of CFA should be familiar with journal entries, how they affect the balance sheet and the impact of transactions such as cash deposited into bank on liquidity and financial health during Level I, under Financial Reporting and Analysis. It’s also key to understanding reclassifications between assets, and to assessing efficiency as well.
Cash Deposited into Bank Journal Entry CFA Questions
Q1. What actually happens to physical cash after you deposit it into a bank?
A) Increases cash
B) Changes cash form
C) Decreases current assets
D) Reduces liquidity
Answer: B
Q2. This transaction will impact what financial ratio?
A) Quick Ratio
B) Current Ratio
C) Debt-to-Equity
D) No effect
Answer: D
Q3. If this transaction were to show up in the financial statements, where?
A) Cash Flow from Operations
B) Cash Flow from Investing
C) Net Profit section
D) Earnings per Share
Answer: A
Q4. Why doesn’t this transaction impact net income?
A) It is an expense
B) It is an income
C) It would be transferring from one balance sheet to another
D) It is non-cash
Answer: C
Q5. This entry will affect which aspect of DuPont Analysis from an analyst’s perspective?
A) Net Profit Margin
B) Asset Turnover
C) Equity Multiplier
D) None of the above
Answer: D
