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 general fund financial statements would be
A) Expenditures $450,000; Supplies inventory $150,000.
B) Expenditures $450,000; Supplies inventory $0.
C) Expenditures $300,000; Supplies inventory $150,000.
D) Expenditures $300,000; Supplies inventory $0.

Question

Quizplus · Accepted Answer

Under the consumption method of accounting for supplies, expenditures are recognized in the amount of supplies consumed during the period, and the remaining supplies are reported as inventory. In this case, $300,000 of supplies were used (and thus recognized as expenditures), and the remaining $150,000 of supplies are reported as inventory.

Shoshone County Uses the Consumption Method to Account for Supplies