What are some contra asset accounts?
Sophia Koch
Updated on January 04, 2026
Types of contra asset accounts
- Accumulated depreciation.
- Accumulated depletion.
- Obsolete inventory reserves.
- Allowance for doubtful accounts.
- Trade accounts receivable.
- Discount on notes receivable.
What are examples of contra liabilities?
Examples of contra liabilities include a discount on notes or bonds payable. Contra liabilities hold a debit balance. Contra liability accounts are not as popular as contra asset accounts. Companies that issue bonds are likely to use contra liability accounts.
What is a contra asset account definition?
In bookkeeping, a contra asset account is an asset account in which the natural balance of the account will either be a zero or a credit (negative) balance. Normal asset accounts have a debit balance, while contra asset accounts are in a credit balance.
Is a contra expense account a debit or credit?
Contra expense accounts have a natural credit balance, as opposed to the natural debit balance of a typical expense account.
What is a contra loan account?
A contra liability account is a liability account where the balance is expected to be a debit balance. The most common contra liability accounts are Discount on Bonds Payable, Bond Issue Costs, Debt Issue Costs, and Discount on Notes Payable.
What is 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.
What is contra account?
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 presenting a decrease or write-down in a separate contra account that nets to the current book value.
Is a contra asset an asset?
What type of balance does asset accounts have?
debit balance
Assets accounts generally have a debit balance. This means that entries created on the left side (debit entries) of an asset T-account increase the asset account balance while journal entries created on the right side (credit entries) decrease the account balance.
Which account is an example of a contra expense account?
Purchase returns, allowances and discounts are all examples of contra expense accounts. The accounts normally have a credit balance and in use are offset against the purchases account which is normally a debit balance.
What is an example of a contra equity account?
A contra equity account is a stockholders’ equity account with a negative balance. Examples of contra equity accounts are: Treasury stock (reflects the amount paid by a business to buy back shares from investors) Owner’s drawing account (shows the amount of funds paid out to an owner)
What is contra entry explain with example?
Contra entry is a transaction which involves both cash and bank. Both debit aspect and credit aspect of a transaction get reflected in the cash book. For example: Cash received from debtors and deposited into bank. Cash withdrawn from bank for office use.
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.
What are examples of expense accounts?
Some common expense accounts are: Cost of sales, utilities expense, discount allowed, cleaning expense, depreciation expense, delivery expense, income tax expense, insurance expense, interest expense, advertising expense, promotion expense, repairs expense, maintenance expense, rent expense, salaries and wages expense.
What is a contra account on a balance sheet?
An account with a balance that is the opposite of the normal balance. For example, Accumulated Depreciation is a contra asset account, because its credit balance is contra to the debit balance for an asset account.
What are the different types of contra asset accounts?
A company might use a combination of different types of asset accounts, and the following six types of contra asset accounts can be used in conjunction with these fixed and current asset accounts. 1. Accumulated depreciation
What does it mean to have a contra account?
Contra accounts are those paired with a related account and used to track and offset the value of the account they’re associated with. For example, if your account normally has a debit balance, the contra account associated with it would have a normal credit balance.
When is a contra asset recorded in a journal entry?
When a contra asset account is first recorded in a journal entry, the offset is to an expense. For example, an increase in the form of a credit to allowance for doubtful accounts is also recorded as a debit to increase bad debt expense.
When to use accumulated depreciation or contra account?
For example, when depreciating an asset, the accumulated depreciation account is used to reduce the book value of the asset while also keeping track of the total amount of depreciation that has been posted to date. If you’re using accounting software, you’ll be able to create contra accounts when setting up your chart of accounts.
