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A contra-account is used with a related account to bring about an increase in the net amount of the two account balances.

a) True
b) False

User Copilot
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1 Answer

6 votes

Final answer:

A contra-account is used to offset or reduce the balance of another related account, not increase it.

Step-by-step explanation:

A contra-account is used with a related account to bring about an increase in the net amount of the two account balances.

This statement is false.

In accounting, a contra-account is an account that is used to offset or reduce the balance of another related account. It is used to show the inverse effect of a transaction on the primary account. For example, a contra-asset account is used to reduce the value of an asset account, while a contra-liability account is used to decrease the value of a liability account.

Therefore, a contra-account does not bring about an increase, but rather a decrease in the net amount of the two account balances. So, the correct answer to the question is b) False.

User Andrew Odri
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