Contra account definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. The term contra account can be defined as: Account linked with another account and having an opposite normal balance; reported as a subtraction from the other account’s balance. A contra account is named contra because the balance in the contra account is the opposite to the normal balance. Accumulated depreciation is the most common contra account, an asset type of contra account, assets generally having debit balances, accumulated depreciation having a credit balance. Sales discount is an example of a contra account, sales discount being part of the sales or revenue section, a debit balance running contra to the normal credit balances for sales. Returns and allowances is an example of a contra account.
