Shoshone County uses the consumption method to account for supplies.At the beginning of the year the City had no supplies on hand.During the year the City purchased $450,000 of supplies for use by activities accounted for in the General Fund.The City used $300,000 of those supplies during the year.At fiscal year-end the appropriate account balances on the government-wide financial statements would be
A)Expenses $450,000; Supplies inventory $150,000.
B)Expenses $450,000; Supplies inventory $0.
C)Expenses $300,000; Supplies inventory $150,000.
D)Expenses $300,000; Supplies inventory $0.

Question

Quizplus · Accepted Answer

Under the consumption method, expenses are recognized as supplies are used. Therefore, $300,000 is recorded as expenses, and the remaining $150,000 is recorded as supplies inventory.

Shoshone County Uses the Consumption Method to Account for Supplies