A contra asset account has which effect on the balance sheet?
- A It has a debit balance and increases total assets
- B It has a credit balance and reduces total assets
- C It increases total liabilities
- D It has no effect until the asset is sold
Answer
It has a credit balance and reduces total assets
Contra asset accounts such as accumulated depreciation and allowance for doubtful debts carry credit balances that offset the related asset.





