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Contra Account

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Definition of 'Contra Account'

An account on a corporation or entity's financial statements that offsets the balance of a related and corresponding account. A contra account is found on financial statements as an offsetting account to represent the financial flip-side of a figure/asset/liability for book-keeping purposes. Contra accounts typically represent the offsetting nature of debits and credits on a company's financials.
Investopedia Says

Investopedia explains 'Contra Account'

A prime example of a contra account would be accumulated amortization. This sort of contra asset account would credit the amortization account in order to offset the debit position to give a more accurate indication of the actual balance of the asset and its useful life on the company's financial statements. This can be used to give a more clear picture on valuation changes.

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