An account the balance of which is subtracted from the balance of a related account so that more complete information than simply the net amount is provided is a(n)
A) Accrued expense
B) Contra account
C) Accrued revenue
D) Prepaid expense
E) Withdrawal

Question

Quizplus · Accepted Answer

A contra account is used to offset a related account and provide more detailed information on transactions. Examples include accumulated depreciation (offsets the fixed asset account) and allowance for doubtful accounts (offsets accounts receivable). The other options - accrued expense, accrued revenue, prepaid expense, and withdrawal - do not involve a contra account.

An Account the Balance of Which Is Subtracted from the Balance