If the Supplies account is not adjusted:
A)assets will be overstated and expenses will be understated.
B)assets will be overstated and expenses will be overstated.
C)assets will be understated and expenses will be overstated.
D)assets will be understated and expenses will be understated.

Question

Quizplus · Accepted Answer

If the Supplies account is not adjusted, the assets will be overstated (as the supplies purchased but not yet used will still be recorded as assets), and the expenses will be understated (as the cost of supplies used will not be recorded as an expense, resulting in a higher net income). This will result in an inaccurate representation of the financial statements.

If the Supplies Account Is Not Adjusted