An Ode to Contra Accounts – A thing of beauty and magic
Oh, Mighty Contra Account
What curious creature are you ?
You sit with the account that you modify apparently mocking the rules of normal balance
You have asset in your name, but your normal balance is credit
You say you are a Liability, but you have a debit normal balance
You claim to be shareholders’ equity but you have a debit normal balance
What kind of magic do you conceal and reveal?
Oh, Mighty contra account
You provide modification and insight
We know more about the subject when you exist
You modify the account to reveal more information.
You make gross and net live in harmony
Oh, Mighty contra account – long may you thrive
Long Live Accumulated Depreciation revealing gross and net long-term assets
Viva Allowance for Bad Debts keeping only net receivables in the balance sheet
Hurrah for treasury Stock making sure that buy backs and issued stock do not get contaminated
Three cheers for sales allowances that reveal net revenue without concealing the gross
Glory to Bond Payable discount bringing insight to Bond Pricing