How to Set Up a Contra Revenue Account in QuickBooks Online

Contra accounts can be used to register the inventory that has been damaged, goods returned by customers, equipment depreciation, etc. In tune with this, a contra-revenue account is used by companies to figure out the items sold and the ones that are not. Now, let’s start with how to set up a contra revenue account in QuickBooks. When these things are not accounted for, it creates a negative impact on the business.

What is a Contra Revenue Account?

Contra revenue refers to deductions made from the gross revenue reported by a business. Which results in net revenue. In simple words, a contra revenue account should have a balance that should be the opposite of a usual credit balance in a particular revenue account. A contra revenue account empowers a business to determine the exact amount sold, along with the products that reduced the sales significantly to the net sales amount.

Here are two best examples of Contra Revenue Accounts:

• Sales Discounts
• Allowances and Sales Returns

Along with these, examples of a contra-revenue account also include sales allowances. As a business owner, you should always debit the contra revenue account, and the corresponding revenue accounts should be credited.

Read More: How to Set Up Direct Deposit in QuickBooks

Steps to Set Up a Contra Revenue Account in QuickBooks Online?

Here is how you can easily set up a Contra Revenue account in QBO.

• In your QuickBooks account, click the Accounting option on the left side of the pane.
• Choose Chart of Accounts
• Select Newly visible on the upper right side
• Choose the Accounting type, Name, and Detail type of the account
• Select Save and Close

Setting up a contra revenue account for business is crucial to keeping the book of accounts accurate and dispute-free. Hence, it is highly recommended that every business owner should do it at the earliest. If you get stuck while adhering to the above-mentioned steps, it is highly recommended to talk to an expert in the field.

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