What is another term for contra asset accounts?

Contra accounts are reported on the same financial statement as the associated account. For example, a contra account to accounts receivable, often called allowance for doubtful accounts, is a contra asset account. This type of account could be called the allowance for doubtful accounts or bad debt reserve.

What is a contra asset account example?

Examples of Contra Assets Accumulated depreciation. Allowance for doubtful accounts. The amount represents the value of accounts receivable that a company does not expect to receive payment for. Reserve for obsolete inventory.

What is the meaning of contra account?

A contra account offsets the balance in another, related account with which it is paired. Contra accounts appear in the financial statements directly below their paired accounts. Sometimes the balances in the two accounts are merged for presentation purposes, so that only a net amount is presented.

Is contra asset an asset?

A contra asset account is a type of asset account where the account balance may either be a negative or zero balance. This type of asset account is referred to as “contra” because normal asset accounts might include a debit, or positive, balance, and contra asset accounts can include a credit, or negative, balance.

What is contra account in SAP?

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.

What is a contra account on a balance sheet?

How does a contra asset work?

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 contra asset a current asset?

Accumulated depreciation is not a current asset account. Accumulated depreciation accounts are asset accounts with a credit balance (known as a contra asset account).

What is an example of a contra asset account?

Examples of Contra Assets. Accumulated Depreciation Accumulated depreciation is the total amount of depreciation expense allocated to a specific asset since the asset was put into use.

What is an example of a contra asset?

Examples of Contra Assets. Common examples of contra assets include: Accumulated depreciation. Accumulated Depreciation Accumulated depreciation is the total amount of depreciation expense allocated to a specific asset since the asset was put into use. Allowance for doubtful accounts. Allowance for Doubtful Accounts The allowance for doubtful

What is the normal balance for contra asset accounts?

contra asset account. the normal balance of an asset account is a debit. the normal balance of a contra asset account is a credit book value the portion of an asset’s original cost that has not yet been depreciated account form balance sheet a balance sheet that lists assets on the left and liabilities and owner’s equity on the right

Is accounts receivable a contra asset?

Net Account receivable is the amount owed to the company after subtracting the amount that will likely never be received from the customer. This likely amount which will not be received from the customer is put into a contra asset account called “allowance for doubtful debts”.