A form of asset account called a contra asset allows the account balance to be either negative or zero. Because contra asset accounts might have a credit, or negative, balance instead of a debit, or positive, balance, this form of asset account is known as a "contra" asset account.
What kinds of assets are considered contra?
- Allowance for Doubtful Accounts and Accumulated Depreciation are two important instances of counter asset accounts. Accounts receivable are decreased by the allowance for doubtful accounts, whereas the value of a fixed asset is decreased by accumulated depreciation.
- A contra asset account in bookkeeping is an asset account whose natural balance is either zero or a credit (negative) balance. The balance in the asset account with which it is associated on the balance sheet is offset by the account.
- A contra account is a general ledger item whose balance differs from the category's typical balance (i.e. asset, liability, or equity).
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