A contra account, in accounting, serves the purpose of reducing the balance of a related account. It is typically linked to a regular account with the same general type but opposite in nature, such that the contra account offsets the related account. For instance, 'Accumulated Depreciation' is a contra account associated with a fixed asset account. Over time, the depreciation expense is recorded in this account, reducing the net value of the asset. Additionally, 'Allowance for Doubtful Debts' is another example of a contra account, created to offset 'Accounts Receivable' for amounts expected to be uncollectible. This approach provides a more accurate representation of the company's financial position. You might see contra accounts specifically listed in the balance sheet, ensuring transparency and clear representation of net amounts. This technique is particularly useful in preparing and reconciling financial statements accurately, such as during month end procedures, to display the net value of assets or receivables after offsets.