When a Firm Purchases Supplies for Use in Its Business $\begin{array}{llcc} \text { Dr. Supplies } \\ \text { Cr. Accounts payable } \\\end{array}$

question 10

Multiple Choice

When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required:
A.
$\begin{array}{llcc} \text { Dr. Supplies } \\ \text { Cr. Accounts payable } \\\end{array}$


B.
$\begin{array}{llcc} \text { Dr. Supplies } \\ \text {Cr. Supplies expense } \\\end{array}$

C.
$\begin{array}{llcc} \text { Dr. Supplies expense } \\ \text { Cr. Supplies } \\\end{array}$

D. $\begin{array}{llcc} \text { No adjustment will probably be required. } \\\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Accounting Standards

Guidelines set by regulatory bodies that dictate how financial transactions and statements should be recorded and reported.

FASB

The Financial Accounting Standards Board, an organization responsible for establishing accounting and financial reporting standards in the United States.

Compromises

Agreements made to settle disputes where each party makes concessions to come to a resolution that is acceptable to all involved.

FASB

The Financial Accounting Standards Board, an independent organization responsible for establishing accounting and financial reporting standards in the United States.