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What Is a Contra Account?

By Motley Fool StaffUpdated Sep 5, 2025 at 2:59 AM

Key Points

  • Contra accounts adjust asset values, like equipment depreciation reducing fixed assets.
  • Increased allowance for doubtful accounts may signal rising uncollectable receivables.
  • Companies use contra liabilities, like bond discounts, to depict true cash flows.

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