When an entry is made to adjust the supplies account and recognize supplies expense for the period, which section of the statement of cash flows is affected?
A) Cash Flow from Operating Activities
B) Cash Flow from Investing Activities
C) Cash Flow from Financing Activities
D) There is no effect on the statement of cash flows.

Question

Quizplus · Accepted Answer

Adjusting entries for supplies expense do not involve cash transactions; they are made to update the accounts for accrual accounting purposes. Therefore, they do not affect the statement of cash flows.

When an Entry Is Made to Adjust the Supplies Account