Contra asset accounts are accounts that are used to reduce the balance of a related asset account. They carry a credit balance, which is the opposite of the typical debit balance for asset accounts. The purpose of contra asset accounts is to provide more accurate financial information by reflecting reductions to the value of the asset. Common examples of contra asset accounts include: 1. Accumulated Depreciation: This account offsets the related asset account, such as machinery or buildings, by reflecting the total depreciation expense recorded over the asset's useful life. This shows the net book value of the asset. 2. Allowance for Doubtful Accounts (or Allowance for Bad Debts): This account reduces accounts receivable to reflect the estimated amount that is uncollectible. It provides a more accurate picture of the expected cash inflows from receivables. 3. Accumulated Amortization: Similar to accumulated depreciation, this account reduces the value of intangible assets over the...