A contra revenue account reduces gross revenue. Which of the following is an example?

• A. Sales Revenue
• B. Sales Discounts
• C. Interest Income
• D. Freight Revenue

Answer: (B)

A contra revenue account offsets gross revenue to show net sales. These accounts carry a normal debit balance and subtract from the revenue line on the income statement, reducing the amount reported as revenue.

Sales Discounts fits this idea because it represents reductions given to customers for paying within terms. As a contra revenue, it decreases gross revenue to arrive at net sales. For example, if gross sales are 100,000 and discounts total 2,000, net sales are 98,000.

The other options are revenue accounts themselves that increase income or represent charges to customers, not offsets to revenue.Sales Revenue adds to revenue, Interest Income is a separate revenue, and Freight Revenue is revenue from shipping charges.