Which of the following shows how the year-end adjustment to recognize supplies expense will affect a company's financial statements?
A)Option A
B)Option B
C)Option C
D)Option D

Question

Which of the following shows how the year-end adjustment to recognize supplies expense will affect a company's financial statements? 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

Option B shows that recognizing supplies expense at year-end will decrease net income and retained earnings on the balance sheet, as well as decrease total assets and decrease equity. This is because recognizing the expense reduces the amount of supplies on hand and therefore reduces the value of assets, which in turn reduces equity.

Which of the Following Shows How the Year-End Adjustment to Recognize