In Which Account Are Postage Stamps Classified?

Multiple Choice Question (MCQ)

In Which Account Are Postage Stamps Classified?

The correct Answer is (c) "Office Supplies"

Reason: Postage Stamps is classified as Office Supplies as it is used in the office by the business for mailing to different persons for business purposes during the accounting period.

A company must adjust the part of office supplies used and part of office supplies on hand as there is possibility that all of the office supplies (postage stamps) are not consumed at the end of the accounting period. So, the adjusting entry to record at the end of the accounting period is to debit office supplies used expense account and a credit to office supplies on hand.

Office supplies on hand is a Current Asset and recorded on balance sheet while office supplies used is an expense and recorded in Income Statement for the period.

All other options are not the right choices here.