Table of Contents
What is a contra transaction?
A Contra/Barter transaction is where two organisations agree to provide goods or services to each other for pre-agreed values. There is exchange of goods or services for other goods or services without using money.
What are examples of contra accounts?
Key examples of contra asset accounts include allowance for doubtful accounts and accumulated depreciation. Allowance for doubtful accounts reduce accounts receivable, while accumulated deprecation is used to reduce the value of a fixed asset.
What are the types of contra entry?
There are four different types of contra account: contra asset, contra liability, contra equity, and contra revenue.
What is purpose of contra entry?
Contra entry represents deposits or withdrawals of cash from bank or vice versa. The purpose of contra entry is to indicate the transactions that effect both cash and bank balances. This entry does not affect the financial positions of a business.
What is contra sales account?
A revenues account with a debit balance instead of the usual credit balance. Examples include sales returns, sales allowances, and sales discounts.
What is contra entry in accounting?
A contra entry is recorded when the debit and credit affect the same parent account and resulting in a net zero effect to the account. These are transactions that are recorded between cash and bank accounts.
What type of account is contra equity?
stockholders’ equity account
A contra equity account is a stockholders’ equity account with a negative balance. This means that the account has a net debit balance. This account reduces the total amount of equity held by a business.
What is bank Contra?
Definition of Contra Entry Contra entry refers to transactions involving cash and bank account. In other words, any entry which affects both cash and bank accounts is called a contra entry. Contra in Latin means the opposite. It is more popularly known as contra voucher. Cash account to Cash account.
Which is an example of a contra account?
Contra accounts appear on the same financial statement as the related account. For example, an accounts receivable’s contra account is a contra asset account. This type of account can also be called the bad debt reserve or allowance for doubtful accounts.
When is a debit entered as a contra entry?
If a debit entry is recorded in an account, it will be recorded on the credit side and vice-versa. Debit and credit aspects of a single transaction are entered in the same account but in different columns. Each entry, in this case, is viewed as a contra entry of the other. Remember the word contra as “Against” or “Opposite”.
How are contra assets different from Contra liabilities?
Contra Liability a/c is not used as frequently as contra asset accounts. It is not classified as a liability since it does not represent a future obligation. The third contra type is contra equity. These contras reduce the equity account and carry a debit balance. Contra equity reduces the total number of outstanding shares on the balance sheet.
What is the difference between book value and contra account?
When recording assets, the difference between the asset’s account balance and the contra account balance is the book value of the asset. There are two major methods of recording a contra account. The allowance method of accounting enables a company to determine the amount reasonable to be recorded in the contra account.