Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Adjusting Entries: Supplies

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Supplies

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Multiple Choice

The main purpose of adjusting entries for supplies at the end of an accounting period is to:

Eliminate all supplies from the balance sheet

Record the correct amount of supplies expense used during the period

Recognize revenue earned from selling supplies

Increase the cash balance to match physical supplies on hand

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Verified step by step guidance

Understand the concept of adjusting entries: Adjusting entries are made at the end of an accounting period to ensure that revenues and expenses are recorded in the correct period, following the accrual basis of accounting.

Identify the purpose of adjusting entries for supplies: Supplies are initially recorded as an asset when purchased. At the end of the period, the portion of supplies used during the period must be recognized as an expense to reflect the consumption of resources.

Determine the correct adjustment: Calculate the amount of supplies used during the period by subtracting the ending balance of supplies (physical count or inventory) from the beginning balance plus any purchases made during the period.

Record the adjusting entry: Debit the Supplies Expense account to recognize the expense and credit the Supplies account to reduce the asset balance, reflecting the supplies used during the period.

Review the impact: The adjusting entry ensures that the financial statements accurately reflect the supplies expense for the period and the remaining supplies asset on the balance sheet.