Hey Guys, me again…hope i’m not flooding the forum… Are all contra accounts listed as assest accounts? which have a negative balances?
contra accout is one which has uncollected payment, i.e, account recivables that wont convert into cash.
yes allowance for bad debts, however i wanted to know if all contra accounts are asset accounts with negative balances?
i think it has to do only with recivables , so yes only asset account with negative balance
I think they have a positive balance but they reduce net assets.
if they have posative balance , how can they reduce net assets. my understanding it is forgone bad debt with liquidity zero
Given my advice track record from yesterday I’m not sure if you should listen to me but this one I’m pretty sure on. A contra account in the accounting sense of the word just means opposite balance, so a contra-asset account has a credit balance as opposed to a debit balance. Which means that when it gets netted against the corresponding asset account it reduces it. Strictly speaking it doesn’t have a “negative” balance. And it is possible, although less common to have a contra-liability account which would be the same sort of thing with an opposite debit/credit setup.
paul’s answer is on point. Accumulated depreciation, allowance for doubtful accounts, discount on bonds (a contra asset for bonds you buy, a contra liability for bonds issued) are all examples of contra accounts.
level1_dec Wrote: ------------------------------------------------------- > i think it has to do only with recivables , so yes > only asset account with negative balance Nope, as mentioned there are other contra accounts outside of receivables.