May 23, 2022/ Steven Bragg
Supplies are incidental items that are expected to be consumed in the near future. The normal accounting for supplies is to charge them to expense when they are purchased, using the following entry.
Debit
Credit
Supplies expense
xxx
Accounts payable
xxx
If the cost of the supplies that you have purchased and not yet consumed is significant, then you can instead record them as an asset, using the following entry:
Debit
Credit
Supplies on hand
xxx
Accounts payable
xxx
By using this later approach, the supplies will appear on your balance sheet as a current asset, until you use them and charge them to expense with this entry:
Debit
Credit
Supplies expense
xxx
Supplies on hand
xxx
Thus, consuming supplies converts the supplies asset into an expense.
Despite the temptation to record supplies as an asset, it is generally much easier to record supplies as an expense as soon as they are purchased, in order to avoid tracking the amount and cost of supplies on hand. Also, charging supplies to expense allows for the avoidance of the fees charged by external auditors who would otherwise want to audit the supplies on hand asset account.
Answer:
The correct choice is option D: Equipment is debited, Accounts payable is credited.
Explanation:
When we purchase items on account or credit, there will be the occurrence of accounts payable.
In the case of purchase of equipment on account, debit what comes in i.e. equipment, and credit accounts payable.
Thus, in the case of credit purchase, equipment a/c would be debited while accounts payable a/c would be credited.
Wrong options:
Option a: Accounts payable would not be debited but the equipment.
Option b: Accounts payable would not be debited but the equipment.
Option c: Cash a/c would not be credited but the accounts payable.
Option e: Cash a/c would not be credited but the accounts payable.
112. Which of the following entries records the acquisition of office supplies on account?A.Office Supplies, debit; Cash, creditB.Cash, debit; Office Supplies, creditC.Office Supplies, debit; Accounts Payable, creditD.Accounts Receivable, debit; Office Supplies, credit113. Which of the following entries records the payment of rent for the current month?A.Cash, debit; Rent Expense, creditB.Rent Expense, debit; Cash, creditC.Rent Expense, debit; Accounts Receivable, creditD.Accounts Payable, debit; Rent Expense, credit114. Which of the following entries records the receipt of cash from patients on account?A.Accounts Payable, debit; Fees Earned, creditB.Accounts Receivable, debit; Fees Earned, creditC.Accounts Receivable, debit; Cash, creditD.Cash, debit; Accounts Receivable, credit115. Which of the following entries records the collection of cash from cash customers?A.Fees Earned, debit; Cash, creditB.Fees Earned, debit; Accounts Receivable, creditC.Cash, debit; Fees Earned, creditD.Accounts Receivable, debit; Fees Earned, credit
111. Which of the following entries records the acquisition of office supplies on account?A. Office Supplies, debit; Cash, creditB. Cash, debit; Office Supplies, creditC. Office Supplies, debit; Accounts Payable, creditD. Accounts Receivable, debit; Office Supplies, creditAnswer: CExplanation:When any Purchase made on account, then a liability under Accounts Payable is created.Hence, Office Supplies will debited and Accounts payable will Credited.