Question

The General Fund reported a beginning balance of inventory of materials and supplies of $122,000. The ending balance was $150,000. Supplies received during the year (purchases) totaled $600,000. The county uses the purchases 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:

c. $600,000

Explanation:

Under the purchase methods of accounting, a business records assets at the fair market value. It is the price that the business paid to acquire the assets.

For the general fund, the cost incurred in acquiring the purchases is $600,000.  This is the figure that will be recorded and reported in books.  The purchase method is contrasted with the consumption method.