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The expenditure that is carried out on supplies can not be capitalized as the benefit from the supplies will be obtained in the short term period within which the supplies will be consumed. Hence, it is to be recorded as an expense, which will adversely hit the net income.
Since no future economic benefits can be obtained from the supplies that are used up in the period for which the financial statements are to be developed, the cost to acquire these supplies must be expensed out and charged to net profits.
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