True/False? Contra Assets are reported on the Balance Sheet as positive amounts that increase total assets.Group of answer choicesTrueFalse
Question
True/False?
Contra Assets are reported on the Balance Sheet as positive amounts that increase total assets.
Group of answer choices
True
False
Solution
Analysis of the Statement
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Definition of Contra Assets: Contra asset accounts are used to reduce the value of related asset accounts. Common examples include accumulated depreciation, which reduces the book value of fixed assets.
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Reporting on the Balance Sheet: Contra assets appear on the balance sheet as negative amounts, effectively decreasing the total assets reported.
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Conclusion: Since contra asset accounts decrease the total assets, stating that they are reported as positive amounts that increase total assets is incorrect.
Final Answer
The statement is False. Contra assets are reported as negative amounts and decrease total assets on the balance sheet.
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