Contra-account
Financial Accounting glossary · The Accounting Cycle & Financial Statements
Definition
Account whose normal balance is opposite that of a related account, used to present adjustments without disturbing the underlying balance.
Contra-account in plain English
A contra-account is a sidekick account that sits next to a main account and points in the opposite direction, so you can subtract from something without erasing the original number. Imagine your phone cost $1,000, but it's worn down by $300 — instead of changing the $1,000 price tag, you keep it and add a separate "minus $300" note beside it, so anyone can see both the original cost and the reduction. This keeps the real history visible while still showing the adjusted, true value. That's why accountants love it: nothing gets hidden, and the underlying number stays intact.
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Practice Contra-account
Which of the following accounts is the proper contra-account to 'Property, Plant, and Equipment'?
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