Companies are usually prepared to buy office supplies as well as administrative supplies : reams of paper, letterhead, ink cartridges or printer toner … These assets generate accounting treatment specific. Compta-Easy presents it and answers the question: how to account for office supplies and administrative supplies?
Accounting for the purchase of office and administrative supplies
All office supplies and administrative supplies are consumed entirely during their first use and instantly disappear after use. They represent what are known as accounting jobs and are recorded in expense accounts (Class 6 accounts “Expenses”) and more particularly in account 6064 “Administrative supplies” .
Attention, different rules apply with regard to office furniture and computer equipment (computer, printer, tablet, smartphone). In most cases they must be locked-in, ie registered in an account in class 2 “Fixed assets” and specifically in account 2184 “Furniture” or account 2183 “Office equipment and computer equipment” . However, there are exceptions, particularly for low-value goods that can be expensed and immediately deducted in the income statement.
The following is the accounting entry for an invoice for the purchase of office and administrative supplies :
We debit :
- Account 6064 “Administrative supplies”
- Account 44561 “VAT deductible on other goods and services”
- And account 401 “Suppliers” is credited .
- At the time the invoice is paid:
- Account 401 “Suppliers” is debited ,
- And account 512 “Bank” is credited .
Example: a company buys paper reams for an amount of 300 euros excluding taxes on 15/01. To this amount is added the VAT for 60 euros that the company is able to recover from the Public Treasury. The invoice is paid on 31/01 / N by check. The following entry will be recorded in a purchase journal on the 15/01/05:
Debit from Account 6064 “Administrative Supplies” for € 300,
Debit from account 44561 “VAT deductible on other goods and services” for € 60,
And credit of account 401 “Suppliers” for 360 €.
At 31/01 / N, in his bank journal this time, the company should record the following entry:
Debit from account 401 “Suppliers” for 360 €,
Account credits 512 “Bank” for 360 €.
Accounting for regularization of unused office and administrative supplies.
At the close of each of its accounting periods, any business (merchants, craftsmen and industrialists, except the liberal professions authorized to keep only cash accounts) must carry out inventory work . In particular, they consist of identifying all the assets in the company, in terms of quantity ( physical inventory ) and value ( inventory valuation ). Office and administrative supplies are not exempt from this rule, but there is a nuance given the “non-storable” nature of these charges. Instead of recording inventory for the fraction corresponding to supplies not consumed at the end of the financial year , It will be necessary to record a pre – determined charge . Here is the writing to go into accounting :
- Account 486 “Deferred charges” is debited ,
- And account 6064 “Administrative Supplies” is credited .
- This writing must be reversed at the opening of the following fiscal year (we speak of reversals in accounting ):
- Account 6064 “Administrative Supplies” is debited ,
- And account 486 “Prepaid expenses” is credited .
Example: a company buys 20 printer toners at 100 euros duty-free unit. She receives them on 25/06 / N. It closes its financial year on 30/06 / N, realizes its inventory and realizes that it has not used any. The purchase invoice was correctly posted to 25/06 / N. As of 30/06 / N, the company must therefore recognize prepaid expenses in a journal of miscellaneous operations:
- Debit from account 486 “Prepaid expenses” for € 2,000,
- Credit for account 6064 “Administrative supplies” for € 2,000.
- The initial charge of 2,000 euros is thus completely offset in the income statement (2,000 – 2,000 = 0).
Conclusion: Purchases of office and administrative supplies are recorded in account 6064 “Administrative supplies”. At the end of the financial year, when their amount is significant, unused supplies give rise to prepaid expenses (CCA).