Contra account
In accounting, contra account means an account with the opposite normal balance to its type, presented as a deduction from its parent — accumulated depreciation against PP&E, the allowance against AR.
- Layer
- Lexicon
- Defined in
- Lexicon
- Nearby
- 4
Not a rule
Bookkeeping convention — not codified. US GAAP governs recognition, measurement and presentation — not the mechanics a bookkeeper uses to get there. Anyone citing a standard for this word is citing the wrong thing.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
The lessons that teach this
Accounting, 0 to 1 — a free course taught end to end on one month of one company, with the spreadsheet exercises to work it yourself.
- 03Accounts, and the five typesEvery account belongs to exactly one of five types, and its type decides which side increases it. Get the type right and the entry writes itself.9 min
- 11The balance sheetThe other three account types, at one instant — and the single line where the month's profit lands, which is what ties the two statements together.10 min
Contra account, in use
Quoted from the document that use the word — what it does to an interface, in the spec's own sentence.
Rendering rule: a contra account is never displayed as a negative asset.
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- Chart of accounts for startups: a starting templateA starting chart of accounts for a US startup: number ranges, the expense accounts you need, and when to add an account versus a class or tracking tag.
- Vendor payment terms and early-pay discounts, explainedWhat Net 30 and 2/10 net 30 really mean, the annualized cost of skipping an early-pay discount, and how to schedule payment runs around your cash.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- negative account
Nearby in the catalog
No component names this concept outright. These are the ones in its part of the system, which is a weaker claim — but a component nothing links to is a component nobody finds.
5Ledger & tables
Family specTerms this one depends on
- Normal balanceThe side that increases an account — debit for assets and expenses, credit for liabilities, equity and revenue, inverted for a contra account
- DepreciationSpreading the cost of a fixed asset over the periods it serves
- AccountA GL account in the chart of accounts. Always qualify when a bank account is meant.
- Fixed assetA tangible asset held for use in operations over more than one period — property, plant and equipment — carried at cost less accumulated depreciation
Also in Core ledger
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
- Trial balance checkerBalances — and then the harder question: is anything sitting on the wrong side of its normal?Tool
- Chart of accountsHow does each ledger model an account?API
- Journal entry for bad debt expenseUnder the allowance method, at each period-end debit Credit loss expense (bad debt expense) and credit Allowance for credit losses for the amount needed to bring the allowance to the expected loss on open receivables.Entry
- Journal entry for depreciationEach period, debit Depreciation expense and credit Accumulated depreciation for the period's charge. The asset account keeps its original cost; accumulated depreciation, a contra-asset, grows until net book value reaches salvage value.Entry
- Journal entry for the sale of a fixed assetWhen a fixed asset is sold, debit Cash for the proceeds and Accumulated depreciation for its balance, credit the asset for its original cost, and book the difference as a gain (credit) or a loss (debit) on sale.Entry
- Journal entry for an owner's drawFor a sole proprietorship or partnership, debit Owner's drawings and credit Cash when the owner takes money out. At year-end, close drawings to capital: debit Owner's capital, credit Owner's drawings. A contribution is the reverse: debit Cash, credit Owner's capital.Entry
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.