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 accounts is always included in adjusting entries for supplies at the end of an accounting period?

A cash account

A supplies expense account

A revenue account

A notes payable account

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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 update accounts for any changes that have occurred but are not yet recorded. These entries ensure that the financial statements reflect the true financial position of the company.

Recognize the nature of supplies: Supplies are considered a current asset when purchased. Over time, as supplies are used, their value decreases, and this usage needs to be recorded as an expense.

Identify the account involved in adjusting entries for supplies: When supplies are used, the Supplies Expense account is debited to reflect the cost of supplies consumed during the period. The Supplies account (asset) is credited to reduce its balance, showing the decrease in the remaining supplies.

Exclude irrelevant accounts: Cash accounts, revenue accounts, and notes payable accounts are not involved in adjusting entries for supplies. Adjusting entries for supplies specifically deal with Supplies Expense and Supplies accounts.

Conclude that the Supplies Expense account is always included in adjusting entries for supplies at the end of an accounting period, as it reflects the expense incurred from using the supplies.