AadilCurious In: 1. Financial Accounting > Accounting Terms & Basics What is a contra revenue account? What is a contra revenue account? Share Facebook You must login to add an answer. Username or email* Password* Captcha* Remember Me! Forgot Password? Need An Account, Sign Up Here 1 Answer Voted Recent Ayushi Curious Pursuing CA 2021-12-07T19:55:41+00:00Added an answer on December 7, 2021 at 7:55 pm This answer was edited. The term ‘contra’ means ‘opposite’. Therefore, a contra revenue account is an account that is opposite of the revenue accounts of a business i.e. sales account. It has the opposite balance of the revenue account i.e. debit balance. The purpose of the contra revenue account is to ascertain the actual amount of sales and record the items which have reduced the sales. These are the contra revenue accounts commonly seen in businesses: Sales return account: This account records the amount of goods sold returned by customers. The journal entry for recording sale return is as follow: The total sales return is deducted from the sales in the balance sheet. Though being opposite of the sales account, the sale return account is not an expense account. It is considered an indirect loss as it reduces sales. Sale Discount account: This account records the amount of discount allowed to customers. The journal entry for recording sale discounts is as follows: Sales discount is an expense hence it is debited to the profit and loss account. Sales returns and sales discounts are shown in the trading and profit and loss account in the following manner: 0 Share Share Share on Facebook Share on Twitter Share on LinkedIn Share on WhatsApp Related Questions What are some examples of deferred revenue expenses? Are brands intangible assets? What comes in debit side of Realisation account? What is recorded in the Realisation account? What is not included in Realisation account? What is recorded on the credit side of a Realisation account? Can accounts payable have a debit balance?