Contra-asset
from class: Principles of Finance Definition A contra-asset is an account that reduces the value of a related asset on the balance sheet. It is typically used to account for depreciation, allowances for doubtful accounts, or accumulated amortization.
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Predict what's on your test 5 Must Know Facts For Your Next Test Contra-assets are paired with specific asset accounts to show net values. Examples include Accumulated Depreciation and Allowance for Doubtful Accounts. They have a normal credit balance, unlike regular asset accounts which have a debit balance. Contra-assets help in more accurately reporting the true value of assets. The use of contra-asset accounts follows the matching principle in accounting, ensuring expenses are matched with revenues. Review Questions What is the purpose of a contra-asset account? Name two common examples of contra-asset accounts. How does a contra-asset account affect the balance sheet? "Contra-asset" also found in:
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