contra account

Definitions (3)
Popular Terms
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.
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.
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.

Use 'contra account' in a Sentence

You may need to set up a contra account to offset an asset you have so that you still have some liquidity available,.
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I did not want to open a contra account, because I already had an account and I did not want to keep track of another one.
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You may want to keep a separate contra account so that you have enough money to cover everything that you may need.
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