What is A Contra Asset Account?
A Contra Asset is the reversal of an Asset Account or Negative Assets Accou nt because it is deducted from its closing balance in the Balance Sheet . Best Examples for Co ntra Asset Accou nts or Negative Assets Accou nts are Allowance For Doubtful Debts Accounts And Accumulated Depreciation. It is created to adjust the balance of An Asset on the happening of an event. For Example, the debts due from few customers may be recoverable or not. So, a provision / allowance for doubtful debts is created in order to provide true information related to collectibles and uncollectibles of the business. Contra Asset Account provides fair and true information to the Users of Financial Statements as they get the Net Value of Assets that actually an entrepreneur or a company owns and controls to provide probable future benefits to the business. What happens if Contra Asset Account is not Reported on Income Statement Or Balace Sheet? ...