On the balance sheet, we have what is known as contra accounts. What is a contra account

Class, I want to throw another term out there as we begin to tie all of these concepts together. On the balance sheet, we have what is known as contra accounts. What is a contra account? What would be an example of a contra account that would relate to cash and why would it be important when analyzing cash flow?

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In accounting, the contra account is used to offset the balance of a related account (Investopedia, n.d.). For the transactions that made to the contra account, they are represented in the financial statements of a company under the related account. The contra account plays a vital role as far as accounting is concerned since they give the company the allowance of using the matching principle whereby an expense………………………………..

APA

197 words

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