You are here
What is a Contra Account?
How it is used in Practise:
There are a number of situations where one account is used to offset another. One popular example is accumulated amortization, which is a contra-asset account; meaning that it acts in the opposite way of a regular asset account.
Assets are debited when increased, and contra-assets are credited when increased.
In this way, the accumulated amortization account would offset the related asset account, which is recorded as a debit. It is important to note that there are also contra-liability accounts, where an account with a debit balance offsets a liability account.
By using the concept of a contra account, it is possible to simply look at the accounting records of a given corporation and trace backwards the history related to certain debits and credits in the books, and how they are related to one another.
Try reviso for free for 14 days
Reviso is a cloud accounting platform providing efficient online collaboration between small businesses and accountants.
Choose between two different trials, both containing all the core features of our accounting system. One of the trials is without data and can be upgraded to a subscription within the 14 days period.