Question

What is inventory of supplies?

Answer 1

Inventory of supplies are not raw material, WIP or finished inventory, but general supplies used in factory or office.

Generally supplies are recorded as assets first when they are purchased with a a debit to supplies increasing balance of supplies. With the period end supplies are counted and the shortfall is considered to be use of supplies. The amount of supplies used is then recorded as supplies expense in the income statement. Supplies expense is debited and supplies is credited which reduces the balance of supplies on hand.

Supplies are show as a Current asset in the balance sheet.

Inventory of supply can be done in the same manner as of Raw material inventory using, Logs, and physical counts at reasonable intervals.

Office supplies includes stapler, pens, paper, printer cartridge etc, while factory supplies are anything apart from indirect material such as packaging, labels, gloves, etc.