Office supplies are classified as which type of account on the balance sheet before use?

• A. Revenue
• B. Liability
• C. Asset
• D. Equity

Answer: (C)

Office supplies are a resource the business owns that will provide future benefits in its operations. On the balance sheet, assets are the resources controlled by the company with value that will help generate economic benefits. Because the supplies haven’t been used yet, they’re still available for use and are counted as a current asset (often labeled Supplies or Office Supplies). When the supplies are eventually used, their cost is transferred to the income statement as Supplies Expense, reducing the asset. This is why, before use, office supplies are classified as an asset, not revenue, liability, or equity.