Final answer:
The term 'supplies expense' refers to the costs associated with purchasing supplies and it appears on the Income Statement (IS), which records a company's revenues and expenses over a period. Supplies expense is not featured on the Balance Sheet (BS), Shareholders' Equity (SE), or the Cash Flow (CF) statement.
Step-by-step explanation:
When categorizing financial transactions for a business, understanding the different types of financial statements is crucial. The options given (BS, IS, SE, CF) stand for Balance Sheet (BS), Income Statement (IS), Shareholders' Equity (SE), and Cash Flows (CF), respectively. In this case, the term supplies expense refers to money spent by a company to purchase supplies that are used within a short period, typically one year.
The correct answer to the question is b) IS. The Income Statement reflects a company's revenues and expenses over a specific period, which usually includes a company's supplies expense among other operational costs. This financial statement shows how the expenses subtract from the revenues to determine the net profit or loss.
Supplies expense would not appear on the Balance Sheet (BS) because this statement shows the company's assets, liabilities, and equity at a point in time, not the expenses. Shareholders' Equity (SE) represents the owners' claim after subtracting liabilities from assets and does not detail operational expenses either. Lastly, the Cash Flow (CF) statement shows the inflow and outflow of cash within the company, but it categorizes cash according to operating, investing, and financing activities, rather than listing specific expenses like supplies.