A contra asset is a line item on a balance sheet, in its own account, that is either a credit balance or zero balance. A contra asset account offsets against another asset account. The two most common contra accounts on a balance are accumulated depreciation and the allowance for doubtful debts.
In respect to this, what is an example of a contra asset?
A contra asset account is an asset account where the balance will be either a credit balance or a zero balance. (A debit balance in a contra asset account will violate the cost principle.) The most common contra asset account is Accumulated Depreciation.
What is a contra account on a balance sheet?
The most common contra asset account is Accumulated Depreciation. Reporting the accumulated depreciation separately allows the readers of the balance sheet to see how much of the cost has been depreciated and how much has not yet been depreciated. Another contra asset account is Allowance for Doubtful Accounts.
What is the meaning of contra entry?
As per the accounting principles, a contra entry is a transaction involving transfer of cash between one cash A/c to another or one cash A/c to another bank A/c i.e., is a transaction indicating transfer of funds from : * Cash account to bank account. * Bank account to cash account.