Do Supplies Count as an Expense on an Income Statement?
An income statement demonstrates how profitable or unprofitable your business has been over the course of a defined period of time by subtracting your company’s expenses, including its office supply expenses, from the revenue your business generated. Depending on the amount of office supplies your company uses during the time period specified by your company’s income statement, you will either list the total amount your business spent on office supplies or the dollar value of the supplies that were actually used on the financial statement.
Your company’s office supplies expense reflects the amount of money your business spent to acquire office supplies. Office supplies are assets until they are used or consumed. Once they are used, they become an expense that is recorded on your company's income statement as, "Supplies Expense," according to Harold Averkamp, creator and author of AccountingCoach. Examples of office supplies commonly purchased by many businesses include writing utensils, paper, staples, tape, sticky notes, paper clips, erasable markers and toner.
If your business does not use a lot of office supplies and you don’t order them in bulk, the office supplies expense that you will record on your company’s income statement will equal the amount of money your business spent to purchase office supplies during the months covered by your income statement. If, on the other hand, your business uses a large amount of consumable items and you keep a supply of them on-hand, your company's income statement will report an office supplies expense that equals the value of the supplies that were used in the specified time period.
If you purchase office supplies as your business needs them, you will not record office supplies as an asset on your company’s balance sheet. If you purchase your office supplies in bulk and store them until they are needed, you will record the value of the unused office supplies that remain on-hand as of the date included in the heading of your company's balance sheet as a current asset labeled, "Supplies On-Hand."
According Harold Averkamp of Accounting Coach, your company's income statement will have either a single-or-multiple-step format. If your business has a single-step income statement, your company's office supplies expense will be added to its other expenses and will be included in the line item known as, "Expenses & Losses."
If your business adopts the multiple-step format, your company's expenses will be presented in three separate categories: cost of goods sold, operating expenses, and non-operating or other expenses. In general, operating expenses will include two subcategories of expenses, selling expenses and administrative expenses. Your company's office supplies expense will be presented as a line item under, "Administrative Expenses."