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. The 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. Therefore, the purchase of computer equipment would be recorded as a debit to Expenditures and a credit to Cash.

On July 1, Gilbert County Bought Computer Equipment for Use