If a company does not record the adjustment entry to recognize the supplies expense then: a....

If a company does not record the adjustment entry to recognize the supplies expense then:

a. net income would be overvalued

b. assets would be undervalued

c. expenses would be overrated

d. retained earnings would be overvalued

Expert Solution

Supplies Expenses:

Supplies expenses are recorded as below,

Supplies Expenses Debited XXX

Supplies Credited XXX

If we not post supplies expenses adjusting entry than supplies shown in the books more than the actual supplies in hand. It means the current assets are more than they in actual

Supplies expenses are not recorded it means expenses are less recorded and net income is overvalued and due to net income overvalued retained earnings is also overvalued.

As per the above explanation,

Answer = Below Options are correct.

a. net income would be overvalued

d. retained earnings would be overvalued

ekkarill92 answered 2 years ago

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