What Is a Contra Expense?
A contra expense reduces the total expense balance on the financial statement. Rather than adding the costs, contra expenses offset them. For instance, if you received a discount from the supplier, it is recorded as a contra expense, thus lowering the overall expense balance.
Contra expense seems like a coupon you use for grocery bills. Every time you spend, the price of the coupon wipes away.
It’s like finding a coupon for your grocery bill—you’re still spending, but a part of the cost is magically wiped away.
