Final answer:
Supplies are recorded as assets and as they are used, the supplies account is adjusted downwards to reflect consumption. Decreased supply in economics shifts the supply curve left and increased supply shifts it right. These changes are influenced by supply determinants like technology or material costs.
Step-by-step explanation:
When supplies are purchased, they are recorded as assets as they represent potential future economic benefits to the business. Over time, as these supplies are used up, this leads to a decrease in the asset account for supplies.
The amount of supplies decrease is recorded as an adjustment to the supplies account, reflecting the actual consumption of supplies. The shift in the supply curve, as depicted in Figure 3.10 of a Car Example, illustrates the concept of supply in economics, which is a different context from accounting for actual physical supplies in a business. In economics, a decreased supply at every given price implies a lower quantity supplied and the supply curve shifts to the left from S0 to S1, while an increased supply results in a higher quantity supplied and the curve shifts to the right from S0 to S2.
These changes in supply can be caused by various supply determinants, such as the invention of new technology that makes production more efficient or changes in the cost of raw materials.