What are supplies expense adjustments commonly based on?

Supplies expense adjustments are commonly based on physical counts of supplies on hand. This approach ensures that the financial statements reflect the actual amount of supplies that are available for use at the end of the accounting period. By conducting a physical inventory count, businesses can accurately assess how much of the supplies have been used and how much remains. This is crucial for ensuring that expenses are recorded accurately, as it aligns the supplies expense with the resources consumed during the period.

Using physical counts also helps to identify any discrepancies that may arise from theft, loss, or damage to supplies, which might not be captured if relying solely on estimates or billing statements. This method provides a concrete basis for adjusting the supplies expense account to accurately reflect the company's financial situation at the reporting date.