If The Adjustment For Supplies Used During The Period Was Not Made

The Effect Of Not Recording Adjusting Entry For Office Supplies Used On Financial Statements

If the Adjustment for office supplies used during the period was not made then expenses would be too low and assets would be too high because we did not record the Office Supplies Expense Account and Office Supplies On Hand.

Moreover, the Net Income is overstated as less expenses are recorded in Income Statement and Assets are overstated in balance sheet as the value of office supplies used is not deducted from office supplies.

The adjusting entry for Office Supplies Used during the period is shown below:

                                                   Office Supplies Expense a/c  XXX

 

                                                                                                             Office Supplies a/c  XXX

 

                                                              (Office Supplies Consumed For The Period)

The remaining part of office supplies is Office Supplies On Hand which is a Current Asset and recorded in the balance sheet.