During a company's first year of operations,the asset account,Office Supplies,was debited for $2,300 for the purchases of supplies.At year-end,a physical count of the supplies on hand revealed that $825 of unused supplies were available for future use.How will the related adjusting entry affect the company's financial statements?
A)Expenses will increase and assets will decrease by $1,475.
B)Assets and expenses will both increase by $825.
C)Expenses and assets will both increase by $1,475.
D)The related adjusting entry has no effect on net income or the accounting equation.

Question

Quizplus · Accepted Answer

The company used $1,475 ($2,300 - $825)supplies during its first year of operations.The adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease assets by $1,475.

During a Company's First Year of Operations,the Asset Account,Office Supplies,was