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What is a contra asset example?
Key examples of contra asset accounts include allowance for doubtful accounts and accumulated depreciation. Allowance for doubtful accounts reduce accounts receivable, while accumulated deprecation is used to reduce the value of a fixed asset.
What are contra assets?
A contra asset is a negative asset account that offsets the asset account with which it is paired. The natural balance in a contra asset account is a credit balance, as opposed to the natural debit balance in all other asset accounts.
What is the contra account for cash?
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.
Is petty cash a contra asset?
Petty cash is a current asset and should be listed as a debit on the company balance sheet.
Which of the following is considered a contra asset account?
accumulated depreciation account
The correct answer is option a. The accumulated depreciation account is a contra asset account because it reduces the effective value of fixed assets of a firm.
Which is a contra account examples?
An account with a balance that is the opposite of the normal balance. Other examples include (1) the allowance for doubtful accounts, (2) discount on bonds payable, (3) sales returns and allowances, and (4) sales discounts. The contra accounts cause a reduction in the amounts reported.
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.
What is contra current asset?
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. The account offsets the balance in the respective asset account that it is paired with on the balance sheet.
Is cash on hand a current asset?
Current assets include cash, accounts receivable, securities, inventory, prepaid expenses, and anything else that can be converted into cash within one year or during the normal course of business. Cash includes cash on hand, in the bank, and in petty cash.
Which of the following is an example of a contra revenue account?
Two examples of contra revenue accounts are: Sales Returns and Allowances. Sales Discounts.
Which account is an example of a contra expense account?
One use of a contra expense account is to record the amounts of expenses that were reimbursed by its employees. For example, Company M might debit its expense account 4210 Employee Health Insurance Expense when recording the insurance company invoice of $10,000.
What is the definition of a contra asset?
An asset account in which the account’s balance will either be a zero or a credit (negative) balance. Home › Resources › Knowledge › Accounting › Contra Asset. In bookkeeping, a contra asset account is an asset account in which the balance of the account will either be a zero or a credit (negative) balance.
What is the natural balance in a contra asset account?
The natural balance in a contra asset account is a credit balance, as opposed to the natural debit balance in all other asset accounts.
How are contra accounts reported on a balance sheet?
Contra accounts are reported on the same financial statement as the associated account. For example, a contra account associated with accounts receivable is referred to as a contra asset account which is reported on the balance sheet immediately below the asset account to which it relates, and reduces the net reported value of the asset account.
Is the allowance for doubtful accounts a contra asset?
In either case, the net amount of the pair of accounts is referred to as the book value of the asset account in question. The allowance for doubtful accounts is a contra asset account, and it is paired with the trade accounts receivable account.