Accounting Fundamentals Certification (AFC) 2025 – 400 Free Practice Questions to Pass the Exam

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When cash is paid for supplies, how is the supplies account affected?

It is decreased by a debit

It is increased by a credit

It is increased by a debit

When cash is paid for supplies, the supplies account is increased by a debit. In accounting, the supplies account is an asset account, and asset accounts are increased with debits. This is part of the double-entry accounting principle, where every transaction affects at least two accounts.

In this scenario, when cash is paid out to purchase supplies, the cash account (an asset) will decrease, representing the outflow of cash. At the same time, to reflect the acquisition of supplies, the supplies account will increase, which is recorded as a debit. This aligns with the fundamental accounting equation, where assets must balance with liabilities and equity.

Understanding this helps clarify the nature of how assets are recorded in the books and ensures that students grasp the practical application of accounting transactions.

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