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

Which of the following correctly lists the steps in the adjusting process for supplies in the proper order?

1. Increase Supplies Expense; 2. Increase Supplies.

1. Determine the supplies used during the period; 2. Record an adjusting entry to decrease Supplies and increase Supplies Expense.

1. Record an adjusting entry to increase Supplies; 2. Determine the supplies used during the period.

1. Determine the supplies purchased during the period; 2. Record an adjusting entry to increase Supplies Expense and decrease Cash.

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Verified step by step guidance

Step 1: Understand the concept of adjusting entries. Adjusting entries are made at the end of an accounting period to update account balances before preparing financial statements. They ensure that revenues and expenses are recognized in the period they occur.

Step 2: Identify the supplies used during the period. This involves calculating the difference between the beginning supplies balance, any supplies purchased during the period, and the ending supplies balance.

Step 3: Record the adjusting entry. To account for the supplies used, decrease the Supplies account (an asset) and increase the Supplies Expense account (an expense). This reflects the consumption of supplies during the period.

Step 4: Use the correct journal entry format. The adjusting entry will typically look like this: Debit Supplies Expense and Credit Supplies for the amount of supplies used.

Step 5: Verify the adjustment. Ensure that the Supplies account reflects the remaining balance of unused supplies and that the Supplies Expense account accurately represents the cost of supplies used during the period.