Which term refers to a type of asset that will be consumed as it is used?

• A. Cost
• B. Supplies
• C. Current Liabilities
• D. Maker

Answer: (B)

Supplies are a type of current asset that is consumed as it is used. In everyday business, items like paper, pens, and cleaning supplies are bought and recorded as assets. As you actually use them, their future economic benefit declines, so they’re reclassified from the asset Supplies to an expense (supplies expense) because they have been consumed. This is exactly what is meant by an asset that will be consumed as it’s used. By contrast, cost is just the price paid for something, current liabilities are obligations owed, and maker doesn’t describe an asset type.