Final answer:
If the supplies account is not adjusted, assets would be overstated and expenses would be understated. This is not one of the provided choices, suggesting a possible error in the options.
Step-by-step explanation:
If the supplies account is not adjusted, the effect on the financial statements would be that assets would be overstated because the supply items that have been used up during the period would still be recorded as assets. Conversely, expenses would be understated because the cost of supplies used has not been recorded as an expense. This means that net income would be higher than it should be because expenses have been understated. Therefore, the correct answer to the student's question is that if the supplies account is not adjusted, assets would be overstated; expenses would be understated, which is not one of the choices provided, indicating a potential error in the question options. However, if we consider the closest correct answer based on typical accounting principles, it would be 'b. Assets would be understated; expenses would be understated', assuming 'understated' for assets is a typo and should actually be 'overstated'.