Which of the following is contra-asset account?Multiple choice question.Deferred RevenueDepreciation ExpenseAllowance for Doubtful AccountsCommon Stock

Break Down the Problem

1. Identify the Type of Accounts:
   • Contra-asset accounts are accounts that reduce the value of related asset accounts on the balance sheet.
   • Understand the options provided to identify which one qualifies as a contra-asset account.

Relevant Concepts

2. Understanding Account Types:
   • Deferred Revenue: A liability representing revenue received before it has been earned.
   • Depreciation Expense: An expense account that reflects the wearing out of an asset; it's not a contra account.
   • Allowance for Doubtful Accounts: A contra-asset account that reduces the total accounts receivable balance to reflect potential uncollectible amounts.
   • Common Stock: An equity account representing ownership in a corporation.

Analysis and Detail

3. Analyze Each Option:
   • Deferred Revenue: Not a contra-asset account; it's a liability.
   • Depreciation Expense: Not a contra account; it is an expense.
   • Allowance for Doubtful Accounts: This directly reduces accounts receivable and is a classic example of a contra-asset account.
   • Common Stock: Not a contra account; it reflects equity.

Verify and Summarize

4. Verify Findings:
   • The only account that reduces the value of an asset is the Allowance for Doubtful Accounts.

Final Answer

The correct answer is Allowance for Doubtful Accounts, as it is the only contra-asset account listed among the options.