Office supplies may or may not be considered a current asset depending on their cost. Generally, supplies are recorded as current assets on a company’s balance sheet until they are used. At that point, they would be transferred to the expense account on the income statement. However, companies may record the cost of supplies immediately as an expense if their cost is low enough to be considered immaterial; that is if the cost was low enough that it would not impact their financial statements and would not reasonably mislead investors.
Are Supplies a Current Asset? FAQs
A current asset is an item of value owned by a business that can be converted into cash within one year. Examples include cash, accounts receivable, inventory, and short-term investments.
Generally, supplies are not considered to be a current asset since they do not have a market value or cannot be readily converted into cash shortly.
Supplies should remain on the balance sheet until they are consumed or expire; at which point their value will become zero and they will no longer be recognized as an asset.
Supplies are typically listed as part of a company's current assets, along with other items such as cash and accounts receivable.
Any unused supplies should remain on the balance sheet until they are consumed or expire; at which point their value will become zero and they will no longer be recognized as an asset. The cost of these supplies can then be reported in an expense account.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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