The entry to adjust for the cost of supplies used during the accounting period is
A) debit Supplies Expense; credit Supplies
B) debit Stockholders' Equity; credit Supplies
C) debit Accounts Payable; credit Supplies
D) debit Supplies; credit Stockholders' Equity

Question

Quizplus · Accepted Answer

The cost of supplies used during the accounting period is recognized as an expense and is recorded in the Supplies Expense account through a debit entry. A credit entry is made in the Supplies account to reduce the balance of supplies on hand. This is based on the principle of expense recognition, which requires recognition of expenses in the period in which they are incurred. Option B is incorrect because Stockholders' Equity is not affected by the cost of supplies used. Option C is incorrect because Accounts Payable is a liability account that is used to record amounts owed to suppliers for goods and services purchased on credit, and is not used to record supplies used by the business. Option D is incorrect because it confuses the use of Supplies as an asset account with the use of Stockholders' Equity as a contra account, which is not appropriate.

The Entry to Adjust for the Cost of Supplies Used