At March 1, I. Repo Inc. reported a balance in Supplies of $200. During March, the company purchased supplies for $950 and consumed supplies of $700. If no adjusting entry is made for supplies:
A) stockholders' equity will be overstated by $700.
B) expenses will be understated by $950.
C) assets will be understated by $450.
D) net income will be understated by $700.

Question

Quizplus · Accepted Answer

If no adjusting entry is made, the consumed supplies of $700 will not be recorded as an expense, causing stockholders' equity to be overstated by $700.