contra account
Definition 1
Asset account that offsets an associated account. For example, accumulated depreciation account that reduces the original cost of an asset to arrive at its book value. Also called contra asset or valuation allowance.
Definition 2
Credit account that can be offset against another. For example, if two firms owe each other, they can settle the debt by making one payment to the one who is owed more.
Definition 3
Liability account that reduces an associated account. For example, bond discount account that reduces the bonds payable account to arrive at the bond's carrying value.
Mentioned in these definitions
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