Contra Assets

A contra asset is an account used to offset the value of related asset accounts, reducing their total balance. Unlike regular asset accounts, which have a debit balance, contra assets typically have a credit balance. They help provide a more accurate representation of an organization’s financial position by accounting for asset depreciation, losses, or allowances.

Categories in the Contra Assets Tab

Depreciation & Amortization

• This account tracks the reduction in value of fixed assets over time.
• Example: A company buys machinery for $50,000, and each year, $5,000 is recorded as depreciation, reducing the net book value of the asset.

Tutorial: How to Add a New Account in the Contra Assets Tab

Adding a new account in the Contra Assets tab follows the same steps as in the Assets tab. However, the key difference is selecting the appropriate Account Type from the Contra Assets category list. Ensure you choose the correct type to accurately track depreciation and offsets to asset accounts.