The adjusting entry to record supplies expense accomplishes which of the following?
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To answer this question, we first need to understand what an adjusting entry is and what it means to record supplies expense.
An adjusting entry is an entry made in the accounting records to update certain accounts at the end of an accounting period. It is necessary to ensure that the financial statements are accurate, as some revenue and expense transactions may not have been recorded during the period.
Supplies expense refers to the cost of supplies consumed or used up during a specific period. This expense is recognized to accurately represent the resources used in the production of goods or services.
Now, let's proceed to the options and see which one best describes the purpose of the adjusting entry to record supplies expense:
1. Reduces the amount of supplies on hand.
2. Increases the amount of supplies on hand.
3. Records the cost of supplies used during the period.
4. Adjusts the valuation of supplies for market value.
Based on these options, the correct answer would be option 3: Records the cost of supplies used during the period.
The adjusting entry to record supplies expense typically involves debiting the supplies expense account and crediting the supplies account. This entry recognizes the cost of supplies used up during the period, reflecting the decrease in the supplies asset and the recognition of the related expense.
In summary, the adjusting entry to record supplies expense helps accurately reflect the consumption of supplies during a specific period by recording the cost of supplies used.