A Little Journey Through (Small And Big) E-Commerce Websites.Reducing Abandoned Shopping Carts In E-Commerce.The Current State Of E-Commerce Filtering.Fundamental Guidelines Of E-Commerce Checkout Design.I’m sure I’m not alone in this opinion! For many payment gateways, the documentation is poorly written, lengthy and, at times, difficult to find. While I love the variety of my work, I generally find working with payment gateways to be frustrating.
I have, therefore, found myself working with a lot of different payment gateways over the years, from the more familiar ones like PayPal and Stripe to some lesser known ones. I’m fortunate that I get to work on many different projects for different clients, each with its own unique challenges. Since treasury stock reduces the total shareholders’ equity amount, treasury stock is entered as a negative value on the balance sheet (i.e.As a developer, I work a lot with e-commerce websites and, as a result, with a lot of payment gateways.An example of a contra equity account would be treasury stock, the amount paid to repurchase previous issuances of stock, which reduces shareholders equity and the total number of shares outstanding.amortized across borrowing term, reduces pre-tax income) and the two are often consolidated. Another type of contra liability is an original issue discount (OID), which shares many similarities as financing fees in terms of accounting treatment (i.e.Financing fees in M&A are an example of a contra liability, as the fees are amortized over the debt’s maturity – which in turn reduces the tax burden (and results in tax savings) until the end of the term.The “Accumulated Depreciation” line item is the contra asset account reflected on the balance sheet, but often they are combined as “PP&E, net”.Depreciation is an example of a contra asset because it reduces the carrying balance of property, plant & equipment (PP&E) while providing tax benefits since depreciation reduces pre-tax income.Contra Liability: Financing Fees, Original Issue Discount (OID).Contra Asset: Accumulated Depreciation, Allowance for Doubtful Accounts.The most common examples of contra-accounts are the following: Hence, the “Accounts Receivable, net” line item on the balance sheet adjusts for the allowance to display a more realistic value of A/R and the cash payments to be received, so investors are not misled or caught off guard by sudden decreases in a company’s A/R. The allowance for doubtful accounts – often called a “bad debt reserve” – would be considered a contra asset since it causes the accounts receivable (A/R) balance to decline. the credit purchases from customers that are not expected to be paid). GAAP, the allowance for doubtful accounts represents management’s estimate of the percentage of “uncollectible” accounts receivable (i.e. Example Contra Account – Allowance for Doubtful Accountsįor instance, under U.S. the difference between the account balance post-adjustment of the contra account balance – represents the book value shown on the balance sheet. Still, the dollar amounts are separately broken out in the supplementary sections most of the time for greater transparency in financial reporting. On a company’s financial statements, the two items – the contra account and paired account – are often presented on a “net” basis: Contra Equity → Debit Balance → Reduction to Paired EquityĪ contra account enables a company to report the original amount while also reporting the appropriate downward adjustment.įor example, accumulated depreciation is a contra asset that reduces the value of a company’s fixed assets, resulting in net assets.Contra Liability → Debit Balance → Reduction to Paired Liability.Contra Asset → Credit Balance → Reduction to Paired Asset.Equity → Credit Balance → Increase Equity Valueīy contrast, contra accounts have the following balances and impact on an account’s carrying value:.Liability → Credit Balance → Increase Liability Value.Asset → Debit Balance → Increase Asset Value.The normal balances and impact on the carrying value are as follows: debit or credit) that offsets the normal account, thereby reducing the paired account’s value.Ĭontra Account Definition in Accounting Debit-Credit Journal EntryĪ contra account is an entry on the general ledger with a balance contrary to the normal balance for that categorization (i.e.
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