What is Office Supplies Expense?

Office Supplies Expense

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Office Supplies Expense

Office Supplies Expense refers to the cost incurred by a business for the routine consumable items that are used in the office on a regular basis. These items do not have a long-term life span and are not capitalized as assets like office equipment, but are instead expensed as they are used.

Examples of office supplies include items such as pens, paper, envelopes, ink cartridges for printers, sticky notes, paper clips, staplers, notepads, and more.

Office Supplies Expense is typically categorized under “Operating Expenses” on the income statement. In terms of accounting, when these items are purchased, they are usually recorded as an asset (like Prepaid Supplies or Office Supplies Inventory). As the supplies are used, the asset account is reduced and an expense is recorded for the amount of the supplies used.

For example, if a company purchases $500 worth of office supplies at the beginning of the month, it might record that amount in an asset account. Then, at the end of the month, if it has used $200 worth of those supplies, it would record an office supplies expense of $200, and the value of the asset account would be reduced accordingly.

Keep in mind, for small businesses or businesses where supplies expenses are not material, the business may choose to expense these items as they are purchased, rather than maintaining a supplies inventory and accounting for their use. Accounting methods can vary depending on the size of the company, the volume of supplies used, and the accounting policies the company has chosen to follow.

Example of Office Supplies Expense

Suppose you are running a small consulting firm named “Strategic Insights Consulting. At the beginning of a quarter, you purchase $600 worth of various office supplies like pens, paper, ink cartridges, notebooks, and sticky notes.

This $600 is initially recorded as an asset (Office Supplies on hand).

Over the course of the quarter, your team uses these supplies. At the end of the quarter, you assess the supplies left and estimate that $200 worth of supplies are still unused, meaning $400 worth of supplies have been used up.

At this point, you make an accounting entry to reduce the Office Supplies on hand account by $400 (the amount used), and record an Office Supplies Expense of $400. This represents the cost of the office supplies used during that quarter. This expense will appear in the “Operating Expenses” section of your income statement.

This process would repeat each accounting period, adjusting for the amount of supplies used in that period. This ensures that the cost of the supplies is matched with the period in which they were actually used, in line with the accrual principle of accounting.

Keep in mind, if the costs were not substantial, for simplicity, some small businesses might just record the full cost as an expense at the point of purchase, rather than maintaining an Office Supplies on hand account and recording the usage each period. This is more common in smaller businesses where the amount of supplies used is not significant enough to warrant more detailed tracking.

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