What is a contra account? What is meant by the term contra? Can you think of an account that we have been using for the last five weeks that acts similar to a contra account; however, we do not refer to it as a contra account?

2. Explain the need for adjusting entries and list the three adjusting entries that will be covered this week in class. If we failed to make the adjustments what effect will this have on the Income Statement? The statement of Owners Equity? and The Balance Sheet?