Assume That a Company Has Purchased Some Supplies During a Month

question 3

Multiple Choice

Assume that a company has purchased some supplies during a month. When it bought the supplies, it recorded a reduction in cash, and an increase in an asset called supplies. At the end of the month, what entry, if any, should be recorded using accrual accounting to reflect the fact that half of the supplies have been used up?

• A) No entry is needed, since no cash payment is being made at the end of the month.
• B) An entry reducing the supplies asset, increasing an expense, and decreasing equity
• C) An entry reducing the supplies asset, increasing a liability, and not changing equity
• D) An entry reducing the supplies asset, decreasing an expense, and reducing equity

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Definitions:

Forgotten

Failed to be remembered or brought to mind due to lapse of memory or neglect.

Players Want

A term referring to the desires or needs of participants in a game or sport.

Coach

A person who instructs or trains a player, team, or individual, in a specific sport, skill, or academic subject.

Rich

Having a great deal of money, resources, or assets; wealthy.