Question

The General Fund reported a beginning balance of inventory of materials and supplies of $122,000. The ending balance was $150,000. Supplies purchased during the year totaled $600,000. The county uses the consumption method. The General Fund should report expenditures for materials and supplies for the year of:_________.A. $ 450,000 B. $ 572,000 C. $ 600,000 D. $ 628,000

Answer 1

Answer:

$572,000

Explanation:

Consumption refers to the utilization of goods and services.  Consumption results in customer satisfaction. In accounting for inventory, the consumption approach considers only the products that have been consumed in a particular period.

The applicable formula is

consumption = beginning  inventory + purchases - ending inventory

For general fund

Beginning inventory = $122,000

Purchases=$600,000

Ending balance = $150,000

Consumption = $122,000 + $600,000 - $150,000

consumption = $722,000-$150,000

=$572,000