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What is a contra account? Let’s go through the concept of contra accounts using lots of examples! The main thing to understand about contra accounts is that contra means opposite. Contra accounts are linked with another account, and have an opposite balance. The usual pattern is gross amount minus the amount in the contra account is net amount. Let’s first take a look at contra accounts on the balance sheet. As you know from studying the basics of debits and credits, balance sheet accounts have a natural state. Assets accounts have a debit balance. Liability accounts have a credit balance. Equity accounts have a credit balance. A contra account has an opposite balance. A contra asset account has a credit balance. A contra liability account has a debit balance. A contra equity account has a debit balance. Remember that contra accounts are always linked with another account, they don’t exist in isolation. A contra asset account is not the same as a liability. A contra liability account...