Questions: A company orders office supplies in June. Those supplies are received and paid for in July. The supplies are used in August. In which month should the company record supplies expense?

The answer is the third one (August): the supplies are used in August.

Explanation for each option:

1. June: This is when the company orders the supplies, but no expense should be recorded at this point because the supplies have neither been received nor used.

2. July: This is when the supplies are received and paid for. However, according to the matching principle in accounting, expenses should be recorded in the period in which they are incurred, not when they are paid for. Since the supplies are not yet used, the expense should not be recorded in July.

3. August: This is when the supplies are actually used. According to the matching principle, the expense should be recorded in the period in which the supplies are used to generate revenue. Therefore, the supplies expense should be recorded in August.

4. Evenly over the three months: This option is incorrect because the expense should be recorded in the period in which the supplies are used, not spread out over the months in which they were ordered, received, and used.

Summary: The supplies expense should be recorded in August, the month in which the supplies are used.