How Accounts and Account Properties Work in Accounting Systems

contra revenue account list

The same is true for other asset accounts like accounts receivable. Accounts receivable is rarely reported on the balance retail accounting sheet at its net amount. Instead, it is reported at its full amount with an allowance for bad debts listed below it.

  • And, in some situations, the contra accounts reverse the debit and credit rules from Exhibit 1 above.
  • You will need to debit the contra revenue account and credit the Accounts Receivable account.
  • Account managers of this kind are responsible for account planning and building a continuing relationship with the customer.
  • Bad debt expense is an expense that a business incurs once the repayment of credit previously extended to a customer is estimated to be uncollectible.
  • Contra asset account examples include any transaction made on a contra account to balance out the debit account.
  • The term account gives its name to the profession, accounting or accountancy.

If you have investments that earn interest, you will need to create an Interest Revenue account. If your business owns stocks in other companies, you will receive dividend payments. This is another non-operating revenue because it is not a day-to-day activity and is not the main operation of your business.

What Is the Difference Between an Inventory Write-Off & Inventory Reserve?

Again, the company’s management will see the original amount of sales, the sales discounts, and the resulting net sales. For example, Sales returns and allowances is a contra-revenue account, in which sales returns and allowances are separately accounted for in order to have a separate data for such items. Equity is the amount funded by the owners or shareholders of a company for the initial start-up and continuous operation of a business. Total equity also represents the residual value left in assets after all liabilities have been paid off, and is recorded on the company’s balance sheet.

contra revenue account list

Treasury Stock AccountTreasury Stock is a stock repurchased by the issuance Company from its current shareholders that remains non-retired. Moreover, it is not considered while calculating the Company’s Earnings Per Share or dividends. Discount On Bonds PayableDiscount on bonds payable is the markdown value of a bond’s coupon rate or selling price compared to its market interest rate or fair value. Harold Averkamp has worked as a university accounting instructor, accountant, and consultant for more than 25 years.

IFRS Sustainability Disclosure Standards (in progress)

In a slightly different sense, customers create an account with a seller or service provider. Accounts of this type may have internet access to their accounts, they may charge purchases to their account, and in some cases, the account may carry a financial balance. IFRS 15 establishes the principles that an entity applies when reporting information about the nature, amount, timing and uncertainty of revenue and cash flows from a contract with a customer. It is clear evident in the chart above that contra account is following the rule of going in reverse.

contra revenue account list

As a 4th step, they check entries with a trial balance and correct them if necessary. The final stage occurs when the firm publishes financial statements. Note, however, however, that public companies must also complete the cycle by having 3rd-Party auditors review them and issue audit opinions, and then filing them with securities authorities.