Contra asset account
Accumulated Depreciation- Office Equipment is a contra asset account which is an account offset against an asset account on the balance sheet. This accumulated depreciation account appears just after the account it offsets (in this case, Office Equipment) on the balance sheet. Its normal balance is a credit.
An alternative to using a contra asset account would be to decrease (credit) the asset account (e.g., Office Equipment) directly for the depreciation each month. But use of the contra account is preferable for a simple reason: it discloses both the original cost of the equipment and the total cost that has expired to date.
Category: Accounting & Auditing
Next: Insurance →
More from this Section
- Retained earnings statement
The retained earnings statement is a financial statement that shows the changes in retained ... - Technique of auditing
The technique of auditing we mean to say the methods of procedure adopted by an auditor ... - Process cost systems
Process cost systems refer to an accounting system that used to apply costs to similar ... - Divisible profits
Divisible profits means those profits which can legally be distributed to the shareholders ... - Cost principles
The cost principles, also known as the historical cost principle is one of the basic underlying ...