For the ledger entry Supplies, what is the type of account and the increase side?

• A. Asset, Cr.
• B. Liability, Cr.
• C. Asset, Dr.
• D. Expense, Dr.

Answer: (C)

Supplies is an asset that represents items the company has on hand for future use. Asset accounts have a normal debit balance, so increases are recorded on the debit (left) side. When you acquire supplies, you debit the Supplies asset account to show more asset. Only when the supplies are actually used do you move cost to an expense (Supplies Expense) by crediting Supplies and debiting Supplies Expense. Because of this, the correct description is that Supplies is an asset and its increase is on the debit side.