Question: What effect does a contra asset account have on a balance sheet?

1. A contra asset is not an accounting term
2. A contra asset has a credit balance and therefore a negative effect on total assets
3. A contra asset with a positive balance will increase overall liabilities
4. A contra asset has a debit balance and therefore a positive effect on total assets

Answer: The correct answer of the above question is Option B:A contra asset has a credit balance and therefore a negative effect on total assets