A Contra-Account

question 196

Multiple Choice

A contra-account:

• A)increases the original value of the account to which it relates.
• B)always appears in the same column of the trial balance as the account to which it relates.
• C)offsets,or reduces,another account.
• D)reduce the asset to its fair value.

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Definitions:

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers.

Collection Policies

Guidelines established by a business to manage the collection of accounts receivable or debts owed to it.

Subsidiary Ledger

a detailed ledger that contains the financial transactions of a specific subsidiary account, summarizing its details, and supporting the general ledger.

Control Account

A general ledger account that summarizes the balances of a set of detailed subsidiary ledger accounts.