Contra Asset Account


Definition: a Contra Asset Account is a type of asset account that offsets the balance of its associated paired asset account. For instance, depreciation is the contra asset account of equipment and building. Contra asset accounts' credit natural balance always maintains a zero or negative balance, contrary to its paired asset account. The term "contra" is used in relation to its associated normal asset account with debit natural balance because the contra asset account maintains a credit balance.


More on accounting and auditing: Accounting Cycle, Accounts Payable, Accounts Receivable, Amortization, Appreciation, more...


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