A contra account is an account that is matched or paired to a related account and subtracted from it. Therefore, its normal balance is the opposite of the related account. Contra-revenue accounts are where you enter transactions that reduce gross earnings. Examples are Sales Discounts and Sales Returns and Allowances. Contra-revenue accounts have a normal debit balance. Sales Returns and Allowances is a contra revenue account and the normal balance is a debt. Sales Discounts is a contra-revenue account to Sales. Contra revenue accounts are offset against a revenue account on the income statement. Contra accounts always have a normal balance that is opposite to what they are contra to.
Showing posts with label Identify the contra accounts that have normal debit balances and explain why they are not considered expenses. Show all posts
Showing posts with label Identify the contra accounts that have normal debit balances and explain why they are not considered expenses. Show all posts
Wednesday, August 3, 2011
Monday, August 1, 2011
Identify the contra accounts that have normal debit balances and explain why they are not considered expenses
A contra account is an account that is matched or paired to a related account and subtracted from it. Therefore, its normal balance is the opposite of the related account. Contra-revenue accounts are where you enter transactions that reduce gross earnings. Examples are Sales Discounts and Sales Returns and Allowances. Contra-revenue accounts have a normal debit balance. Sales Returns and Allowances is a contra revenue account and the normal balance is a debt. Sales Discounts is a contra-revenue account to Sales. Contra revenue accounts are offset against a revenue account on the income statement. Contra accounts always have a normal balance that is opposite to what they are contra to.
(WCS) Intermediate Accounting 12th edition Strayer
(WCS) Intermediate Accounting 12th edition Strayer
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