Which of the following is a contra asset account? The most common contra asset account is Accumulated Depreciation. Accumulated Depreciation is associated with property, plant and equipment (plant assets). Accumulated Depreciation will be credited when Depreciation Expense is recorded.
What are examples of Contra equity accounts?
An owner's or stockholders' equity account with a debit balance instead of the normal credit balance. Examples include the owner's drawing account, a dividend account, and the treasury stock account.
What is a contra asset account used for?
A contra asset is a negative asset account that offsets the asset account with which it is paired. The purpose of a contra asset account is to store a reserve that reduces the balance in the paired account.
Is depreciation a contra account?
In other words, accumulated depreciation is a contra-asset account, meaning it offsets the value of the asset that it is depreciating. As a result, accumulated depreciation is a negative balance reported on the balance sheet under the long-term assets section.
What is a contra liability account?
In finance, a contra liability account is one that is debited for the explicit purpose of offsetting a credit to another liability account. Contra liabilities reduce liability accounts and carry a debit balance. In other words, the contra liability account is used to adjust the book value of an asset or liability.
Related investments for Which Of The Following Is A Contra Asset Account?
What is a contra asset account give two examples of such an account quizlet?
What are contra asset accounts? Examples? -Examples: Allowance for doubtful accounts, Accumulated depreciation. You just studied 61 terms!
Is inventory a contra account?
What is a Contra Inventory Account? A contra inventory account is a general ledger account that is paired with the inventory account, and which contains a negative balance that represents a reserve for obsolete or damaged goods.
Which of the following is an example of a contra revenue account?
Sales Discounts Credit Card Discounts Sales Returns And Allowances Allowance For Doubtful Accounts. The contra revenue accounts commonly used in small-business accounting include sales returns, sales allowance and sale discounts.
Is prepaid rent a contra asset?
The initial journal entry for prepaid rent is a debit to prepaid rent and a credit to cash. These are both asset accounts and do not increase or decrease a company's balance sheet. Recall that prepaid expenses are considered an asset because they provide future economic benefits to the company.
Is a contra entry debit or credit?
A contra entry is recorded when the debit and credit affect the same parent account and resulting in a net zero effect to the account. These are transactions that are recorded between cash and bank accounts.
Are Contra liabilities assets?
A contra asset account is not classified as an asset, since it does not represent long-term value, nor is it classified as a liability, since it does not represent a future obligation.
Which of the following is an example of a contra revenue account quizlet?
The Sales Discounts account is an example of a contra revenue account. A sales allowance is recorded as a debit to Accounts Receivable and a credit to Sales Allowances. *A sales allowance is recorded as a debit to Sales Allowances and a credit to Accounts Receivable.
Which of the following is a contra asset account quizlet?
Which of the following is a contra account? Accumulated Depreciation is a contra asset account. It is located in the long-term asset section of the balance sheet under the heading of property, plant, and equipment.
Is a contra asset account quizlet?
A contra-asset account shown as a deduction from the related asset account in the balance sheet. An account with a credit balance that is offset against or deducted from an asset account to produce the proper balance sheet amount for the asset.
What are contra payments?
A contra account makes allowances for payments in the form of products or services rather than cash. We'll define contra below as well as discuss how to record a contra invoice in your accounts.
Is a contra asset a current asset?
Accumulated depreciation is not a current asset account. It is considered a contra asset account because it contains a negative balance that intended to offset the asset account with which it is paired, resulting in a net book value.
Is sales return a contra account?
Sales allowances occur when customers agree to keep such merchandise in return for a reduction in the selling price. Therefore, sales returns and allowances is considered a contra‐revenue account, which normally has a debit balance.
Is bad debt expense a contra account?
Your allowance for bad debts is a contra-asset account, which means that it will appear on your balance sheet alongside all of your other asset accounts.
How do you record contra entries?
In the debit side of the contra book, 'To Cash A/c' will be entered under the particulars column and the amount will be entered in the bank column. In the credit side of the contra book 'By Bank A/c' will be entered under the particulars column and the amount will be entered in the cash column.
Is cash drawing a contra entry?
A drawing account acts as a contra account to the business owner's equity; an entry that debits the drawing account will have an offsetting credit to the cash account in the same amount.
Why is contra asset important?
Importance of Contra Accounts
A contra account always offsets the balance of a corresponding account. Any entry made to contra accounts is presented on a company's balance sheet under the paired account. The contra accounts in the balance sheet help the users of the financial statement to get complete information.
What accounts are contra accounts?
There are four key types of contra accounts—contra asset, contra liability, contra equity, and contra revenue. Contra asset accounts include allowance for doubtful accounts and accumulated depreciation. Contra asset accounts are recorded with a credit balance that decreases the balance of an asset.
Which of the following accounts is not a contra revenue account quizlet?
Total stockholders' equity remains the same. 2. Total assets remain the same. 3.
Do contra revenue accounts increase the amount of operating expenses?
contra revenue accounts increase the amount of operating expenses.
Which of the following is not considered in computing net purchases?
The correct option is (d) freight paid on goods shipped to customers.