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A contra asset account has which effect on the balance sheet?

  1. A It has a debit balance and increases total assets
  2. B It has a credit balance and reduces total assets
  3. C It increases total liabilities
  4. 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.

All Accounting MCQs

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