The business is still going well. I was going through a list of items I would need to buy for my business. I came across a mention of supplies and inventory. What's the difference between the two? Supplies and inventory are easy to mix up, but they are important to differentiate. Supplies are office and warehouse items: stationary, toilet paper, pens, etc. In other words, supplies are used in business operations. Inventory is composed of items that are sold to customers. The difference should be simple to remember. Supplies are items sold to customers. Inventory is office and warehouse items that employees use in business operations. Supplies and inventory can be tricky to differentiate. Supplies are a current asset that is reported in the income statement. On the other hand, inventory is a long-term expense that is reported in the balance sheet.