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Jun 16, 2024 · A contra account is an account used in a general ledger to reduce the value of a related account. They are useful to preserve the historical value in a main account while...
Jan 11, 2024 · A contra account enables a company to report the original amount while also reporting the appropriate downward adjustment. For example, accumulated depreciation is a contra asset that reduces the value of a company’s fixed assets, resulting in net assets.
Contra asset accounts allow users to see how much of an asset was written off, its remaining useful life, and the value of the asset. Some of the most common contra assets include accumulated depreciation, allowance for doubtful accounts, and reserve for obsolete inventory.
Jan 17, 2024 · What are Contra Accounts? A contra account offsets the balance in another, related account with which it is paired. The natural balance of a contra account is the reverse of the related account in the pairing. Thus, if the related account has a natural debit balance, then the associated contra
- Contra Asset. An asset that is recorded as a credit balance is used to decrease the balance of an asset. The balance of a contra asset account is a credit balance.
- Contra Liability. A liability that is recorded as a debit balance is used to decrease the balance of a liability. The balance of a contra liability account is a debit balance.
- Contra Equity. Equity that is recorded as a debit balance is used to decrease the balance of a standard equity account. It is a reduction from equity because it represents the amount paid by a corporation to buy back its stock.
- Contra Revenue. A reduction from gross revenue, which results in net revenue, is the contra revenue Contra Revenue Contra revenue refers to any difference between a company's gross sales and net sales due to sales returns, allowances or discount.
A contra account is a general ledger account with a balance that is opposite of the normal balance for that account classification. The use of a contra account allows a company to report the original amount and also report a reduction so that the net amount will also be reported.
Contra asset accounts have a balance that is opposite from the regular asset accounts. In other words, a contra asset account maintains a credit balance instead of a debit balance. Accumulated depreciation is a good example.
