Which of the following shows how adjusting the accounts to recognize supplies expense will affect a company's financial statements?

Question

Quizplus · Accepted Answer

Recognizing supplies expense at the end of the accounting period is an asset use transaction. The asset account (cash) decreases, supplies expense increases, net income decreases, and stockholders' equity (retained earnings) decreases. There is no effect on cash flow. The effect on cash flow occurs at the time the company pays for the supplies not when the supplies are expensed.

Which of the Following Shows How Adjusting the Accounts to Recognize