For some people, acquiring office supplies is an extravagance, especially these days, where paperless systems at work are being recommended. However, it’s also a fact that having everything you need in your office can help you perform your job quickly and easily. Some individuals end up asking themselves, “Are office supplies a current asset?” Let’s find out.
Are Office Supplies Asset or Expense
While assets are anything that an entity or a business owns, expenses are the cost incurred by the business to earn. When talking about office supplies, it can be both. Are you starting to wonder how?
Well, office supplies that are consumed or used already are an expense. On the other hand, office supplies in your office that are still stocked or unused are assets.
What is an Asset?
So, are office supplies a current asset or not? To answer that, you should have a basic understanding of what assets are.
An asset is anything that a business owns. It also reduces expenses or improves sales, regardless of whether it’s manufacturing equipment or a patent.
To summarize it, here are the characteristics of an asset:
- It is controlled by the entity – It means that this is anything the company owns.
- It is a result of past transactions or events – To explain it further, just planning to purchase a piece of equipment will not result in a transaction.
- Provides future economic benefits – Assets contribute to the inflow or outflow of cash of the company.
- The cost of an asset should be measured reliably – This means that the cost of an asset should be accurate.
Current Assets vs. Non-current Assets
To know whether office supplies are a current asset, it is necessary to learn its definition.
- Current assets are defined as short-term resources that are expected to be converted into cash within a year. They include cash, cash equivalents, inventory, accounts receivable, and prepaid expenses.
- Non-current assets are defined as all other assets not classified as current assets. They include property, plant and equipment, long term investments, intangible supplies, and other non-current assets.
Definition of Office Supplies
Office supplies are items that are consumable within an office setting during normal business operations. They are used to carry out tasks in a company’s departments outside of manufacturing or shipping. Learn more about office supplies here!
Office Supplies are Recognized as Current Assets
Having this knowledge of assets can help you and your company or business. And for you to know the answer to the question, “Are office supplies a current asset?” it is important to understand if they have characteristics that a current asset should have. Yes, they are controlled by an entity or a company. Office supplies will also provide future economic benefits, and their cost can be measured reliably. For those reasons, office supplies are a current asset.