On July 1, Gilbert County bought computer equipment for use in the administrative offices of the County.The equipment has an estimated useful life of three years and salvage of $10,000.Gilbert County has a 6/30 fiscal year-end.Assuming that the County maintains its books and records in a manner that facilitates the preparation of fund financial statements, the $85,000 cost of this equipment would require which of the following entries?
A)Debit Expenditures $85,000; Credit Cash $85,000.
B)Debit Equipment $85,000; Credit Cash $85,000.
C)Debit Expenses $85,000; Credit Cash $85,000.
D)No entry in the City's governmental funds.

Question

Quizplus · Accepted Answer

In governmental fund accounting, capital outlays are recorded as expenditures when the asset is acquired. Therefore, the purchase of the equipment would be recorded as a debit to Expenditures and a credit to Cash.

On July 1, Gilbert County Bought Computer Equipment for Use