At March 1, Progressive Auto Inc. reported a balance in Supplies of $200. During March, the company purchased supplies for $750 and consumed supplies of $800. If no adjusting entry is made for supplies
A) owner's equity will be overstated by $800.
B) expenses will be understated by $750.
C) assets will be understated by $150.
D) net income will be understated by $800.

Question

Quizplus · Accepted Answer

If no adjusting entry is made, the consumed supplies of $800 will not be recorded as an expense, causing owner's equity to be overstated by the same amount.