Accounting glossary
What is contra account?
An account that offsets a related account to show a net truth: accumulated depreciation against equipment, allowance for doubtful accounts against receivables. The gross and the offset stay visible instead of vanishing into one net number.
Example
Equipment sits at its $40,000 cost, and accumulated depreciation of $16,000 sits beside it as a contra account. The balance sheet shows both, and the net book value of $24,000.
Netting them into one $24,000 line would hide what the asset originally cost — information that matters for insurance, disposal and the CCA schedule.
In SeroBooks
Accumulated depreciation is kept beside asset cost in the fixed-assets ledger accounts. General ledger →
Stop looking terms up. Start seeing them work.
Free to start, on Windows, Mac, iPad and Android. No credit card.