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A retailer holds glass cleaner that it uses to wipe down its own checkout counters. How should this item be classified?
AAs equipment
BAs inventory
CAs a supply
DAs cost of sales
Answer & Solution
Correct answer: C. As a supply
1. Inventory is items purchased for resale to customers.
2. Supplies are items purchased to be used in operating the business, not to be sold.
3. The glass cleaner is used to keep counters clean, not resold, so it is a supply.
4. It is not equipment (a fixed asset used in operations) and not cost of sales (an expense for goods already sold).
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §3.1 "Introduction", p.92_