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How to explain bank transactions using the contra account

This article describes how to explain bank transactions using the contra account.

The contra account is a holding account designed for situations where money comes into your bank account and then goes straight back out, or vice versa. For example, a bounced cheque or money paid to the business in error and then refunded.

Once the bank transactions have been imported into your FreeAgent account via a bank feed or uploaded from a bank statement, you will need to follow the steps below to explain the money in and money out of your bank account using the appropriate ‘Type’ and ‘Category’.

Please note that you will need to have level 6 access or above to your FreeAgent account to explain bank transactions.

Explaining the money paid into your bank account

You will need to explain the bank transaction paid into your bank account as a receipt into the contra account.

To do this, navigate to the ‘Banking’ tab at the top of the screen and select ‘Bank Accounts’ from the drop-down menu.

Contra_1.png

Choose the relevant bank account from the list.

Contra_2.png

Select the relevant transaction.

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Select ‘Other Money In’ from the transaction ‘Type’ drop-down menu.

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Select ‘Receipt into Contra Account’ from the transaction ‘Category’ drop-down menu.

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You can enter a description so that you can identify what the transaction relates to.

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Select ‘Explain Transaction’ to complete the process.

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Explaining the money paid out of your bank account 

You will need to explain the bank transaction paid out of your bank account as a payment from the contra account.

To do this, navigate to the ‘Banking’ tab at the top of the screen and select ‘Bank Accounts’ from the drop-down menu.

Contra_1.png

Choose the relevant bank account from the list.

Contra_2.png

Select the relevant transaction.

Screenshot_2021-07-29_at_15.30.53.png

Select ‘Other Money Out’ from the transaction ‘Type’ drop-down menu.

Screenshot_2021-07-29_at_15.32.16_copy.png

Select ‘Payment from Contra Account’ from the transaction ‘Category’ drop-down menu.

Screenshot_2021-07-29_at_15.32.16_copy_2.png

You can enter a description so that you can identify what the transaction relates to.

Screenshot_2021-07-29_at_15.32.16_copy_3.png

Select ‘Explain Transaction’ to complete the process.

Screenshot_2021-07-29_at_15.32.16_copy_4.png

Once both the money in and money out transactions have been explained using the contra account as described above, the balance on the contra account will return to zero.

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