Question

The usual balance in a Contra-Liability account is a:

A. It depends
B. DR (Debit)
C. CR (Credit)

Answer 1

The usual balance in a Contra-Liability account is a debit (DR). Contra-liability accounts offset the related liability accounts, which normally have a credit balance, thus they carry a debit balance.

Step-by-step explanation:

The usual balance in a Contra-Liability account is a Debit (DR). Contra accounts have the opposite balance to the accounts they relate to, meaning if the related account has a credit balance, the contra account would have a debit balance. In accounting, the "T" in a T-account separates the assets, on the left, from its liabilities and net worth, on the right. Traditional liability accounts have a credit balance; therefore, a contra-liability account would have a debit balance as it offsets the credit balance of the related liability account. An example of a contra-liability account is the discount on bonds payable, which reduces the total amount of bonds payable recorded as a liability.

Answer 2

The usual balance in a Contra-Liability account is C. CR (Credit).

Step-by-step explanation:

A Contra-Liability account is an account that is offset against a liability account. In accounting, the normal balance of a liability account is on the credit side. Since a Contra-Liability account offsets a liability, it carries the opposite balance, which is a credit balance. This means that the usual balance in a Contra-Liability account is on the credit side. It is essential to understand that the balance in a Contra-Liability account is used to reduce the reported amount of the corresponding liability on the balance sheet.

Option C is the answer.