Contra equity account

A contra equity account is a stockholders' equity account with a negative balance. This means that the account has a net debit balance. This account reduces the total amount of equity held by a business. Examples of contra equity accounts are:

  • Treasury stock (reflects the amount paid by a business to buy back shares from investors)
  • Owner's drawing account (shows the amount of funds paid out to an owner)

Related Courses

The Balance Sheet