Contra Revenue Account Debit Or Credit

A contra revenue account is a revenue account that is expected to have a debit balance instead of the usual credit balance.

Contra revenue account debit or credit. When the two balances are offset against each other they show the net balance of both accounts. In the above method we debit the contra revenue account in the trading account but generally the company uses the first method of accounting of contra revenue. The effect of contra revenue in income statements provides accurate financial information of the company. There are three commonly used contra revenue accounts.

Contra revenue is a deduction from gross revenue which results in net revenue. In other words its expected balance is contrary to or opposite of the usual credit balance in a revenue account. A contra asset is an asset account in which the balance of the account will either be a zero or a credit balance. Sales returns is a contra.

A contra asset account offsets the balance in the respective asset account that it is paired with. Let s illustrate revenue accounts by assuming your company performed a service and was immediately paid the full amount of 50 for the service. A normal asset account has a debit balance while a contra asset account has a credit. As an revenue account is normally a credit balance a contra revenue account will normally be a debit balance.

If a debit is the natural balance recorded in the related account the contra account records a credit. Contra revenue is a deduction from the gross revenue reported by a business which results in net revenue contra revenue transactions are recorded in one or more contra revenue accounts which usually have a debit balance as opposed to the credit balance in the typical revenue account there are three commonly used contra revenue accounts which are. Accounts with balances that are the opposite of the normal balance are called contra accounts. All assets have a debit balance increase with debit therefore a contra asset account would be a.

A debit will be made to the bad debt expense for 4 000. A contra asset account would be just the opposite of an asset. The contra revenue account. That depends it could be either.