Question

what is the difference between supplies and inventory in accounting transactions and journal entries

Answer 1

Supplies are purchased for consumption in the business whereas inventory is purchased for sale in the ordinary course of business.

When supplies are consumed, it is treated as expense and supplies expense are debited and supplies are credited.

When inventory is sold, cost of goods sold is debited and inventory is credited.

Both supplies and inventory have debit balance. When they are consumed (supplies) and sold (inventory) they are credited because their balance is reduced.