Contra Account
All accounts have corresponding contra accounts depending on what transaction has taken place i.e. when a vehicle is purchased using cash, the asset account "Vehicles" is debited as the vehicle account increases, and simultaneously the asset account "Bank" is credited due to the payment of the vehicle using cash. Some balance sheet items have corresponding contra accounts, with negative balances, that offset them. Examples are accumulated depreciation against equipment, and allowance for bad debts against long-term notes receivable.
Read more about this topic: Debits And Credits
Famous quotes containing the words contra and/or account:
“What is this that roareth thus?
Can it be a Motor Bus?
Yes, the smell and hideous hum
Indicat Motorem Bum ...
Domine, defende nos Contra hos Motores Bos!”
—Alfred Godley (1856–1925)
“I still feel just as I told you, that I shall come safely out of this war. I felt so the other day when danger was near. I certainly enjoyed the excitement of fighting our way out of Giles to the Narrows as much as any excitement I ever experienced. I had a good deal of anxiety the first hour or two on account of my command, but not a particle on my own account. After that, and after I saw that we were getting on well, it was really jolly. We all joked and laughed and cheered constantly.”
—Rutherford Birchard Hayes (1822–1893)