Contra Account
Definition
An account deliberately carrying the opposite balance to the account it is paired with, so both the gross figure and the reduction stay visible. Accumulated depreciation offsets fixed assets; allowance for doubtful accounts offsets receivables; sales returns offset revenue.
Related Terms in Core Accounting
Sub-Ledger
A detailed ledger holding the individual transactions behind a single general-ledger account, such as one line per customer in accounts receivable. The sub-ledger total must agree with its general-ledger control account.
Control Account
A general-ledger account whose balance summarises an entire sub-ledger, for example the receivables control account standing for every customer balance. Comparing the two is a routine check that no detail entry has been lost or double-counted.
Suspense Account
A temporary holding account for transactions that cannot yet be classified, perhaps an unidentified bank receipt or an entry pending documentation. It should be investigated and cleared to zero before the books are closed.
Clearing Account
A transit account used to hold amounts briefly while a transaction moves between systems or stages, such as undeposited funds or a payroll clearing account. By design it nets to zero once both sides of the transaction are posted.
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