Contra Account: Types and Examples
A contra account is an account that offsets another account on a financial statement. Contra accounts are used to record adjustments to the value of an asset or liability. For example, a contra account may be used to record the accumulated depreciation of an asset.
There are two types of contra accounts:
1. Negative contra accounts
2. Positive contra accounts
Negative contra accounts typically have debit balances and positive contra accounts typically have credit balances. What type of account is capital? Capital refers to the funds that are available to a business to grow, expand, and create tangible assets. These funds can come from a variety of sources, including the sale of equity, debt issuance, and reinvestment of profits. Capital can also be used to finance operations, such as the purchase of inventory or the payment of salaries. What is the type of drawing account? A drawing account is a type of account that is used to track money that has been withdrawn from a business. This account is typically used by businesses that are organized as sole proprietorships or partnerships. The account is used to track money that is withdrawn for personal use by the business owner or partners. Is depreciation expense a contra account? A depreciation expense is not a contra account. A contra account is an account that is used to offset or "contra" another account. For example, a contra asset account is used to offset the value of an asset account.
How do you record contra revenue? In accounting, contra revenue is defined as revenue that is offsetting, or opposite of, regular revenue. In other words, it is revenue that is not generated from the sale of goods or services. Instead, it is generated from the return of goods or services, or from the write-off of bad debt.
There are a few different ways to record contra revenue in your books. The most common method is to create a contra revenue account and then to record the offsetting revenue in that account. For example, if you have a return of goods from a customer, you would record the return in the contra revenue account.
Another method is to record the contra revenue directly in the accounts that it offsets. For example, if you have a return of goods from a customer, you would record the return in the same account that you recorded the sale in. This method is less common, because it can be more difficult to track the offsetting revenue.
The third method is to create a separate revenue account for each type of contra revenue. For example, you could have an account for returns, an account for write-offs, and an account for discounts. This method is the most detailed, but it can also be the most difficult to manage.
The method that you choose will depend on your specific needs and preferences. Whichever method you choose, make sure that you are consistent in how you record contra revenue. Is contra revenue an expense account? "Contra revenue" is not an expense account. Rather, it is an account that is used to offset revenue. For example, if a company sells a product for $100, but it costs the company $50 to produce the product, the company would record $50 in revenue and $50 in contra revenue.