What is an example of a contra-account?

A contra-account is an account that offsets the balance of a related account, providing a more accurate picture of a company's financial position. Accumulated depreciation is a prime example of a contra-account because it is used to reduce the book value of fixed assets. As fixed assets such as equipment and buildings are used over time, they lose value, and this loss is tracked in the accumulated depreciation account. The net value of the asset is then reflected on the balance sheet by subtracting accumulated depreciation from the asset's original cost, giving stakeholders a clearer view of the current value of the asset.

Other options listed, such as accounts payable, capital stock, and accounts receivable, are not contra-accounts. Accounts payable represents liabilities owed to creditors, capital stock reflects equity ownership, and accounts receivable shows money owed to the company by customers. None of these accounts offset another account in the same way that accumulated depreciation offsets the book value of fixed assets.