Equipment and Supplies: Definition and Differences

Bittime - Learn the difference between equipment and supplies in business operations. Equipment is a tangible fixed asset with a long life, while supplies are consumables for daily needs.

What is Equipment?

Tangible fixed assets used in production processes or business operations are known as equipment. Compared to materials, equipment can be reused over a longer period of time and lasts longer. 

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What Are Supplies?

Items used to carry out daily business operations are called supplies. Even though these items are not a direct part of the finished product sold to customers, they still play an important role in business operations.

What is the Difference Between Equipment and Supplies?

The difference is that supplies have a relatively short lifespan, can be used up or consumed within a short time, are not directly part of the finished product and supplies costs are usually recorded as operational expenses.

Meanwhile, equipment has a relatively long lifespan, can be reused for a long period of time, can be part of a finished product or used in the production process and equipment costs are usually recorded as fixed assets. That's the difference.

Conclusion

Equipment and supplies are two types of goods that are very important for business operations, but each has different functions and features. Items used to carry out daily business operations are called supplies. Tangible fixed assets, which are used in production processes or business operations, have a relatively long useful life and can be reused over a relatively long period of time. Fixed assets are usually recorded as fixed assets. Products are not included in the finished product directly, and their costs are usually referred to as operating costs. Understanding what differentiates the two is critical to accurate financial reporting and good inventory management.

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