Which of the Following Is Considered a Contra-Asset Account

question 132

Multiple Choice

Which of the following is considered a contra-asset account?

• A) Prepaid expenses.
• B) Unearned revenue.
• C) Accumulated depreciation.
• D) Accounts receivable.

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Definitions:

Modified Cash Basis

A method of accounting that combines elements of both cash and accrual accounting, recording most transactions on a cash basis, but also incorporating the accrual basis for significant items.

Warranty Expense

Costs associated with the obligation to repair or replace defective products sold to customers, recognized as a liability.

Estimated Liability

A probable future outflow of resources, arising from past transactions or events, the amount of which is not certain.

Cash Discounts

A reduction in invoice amount offered by sellers to buyers as an incentive for early payment.