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 purchases $600,000 of supplies for use by activities accounted for in the General Fund.The City used $400,000 of those supplies during the year.At fiscal year-end the appropriate account balances on the General Fund financial statements would be

Question

Quizplus · Accepted Answer

Since Shoshone County uses the consumption method to account for supplies, the expenditures recorded for supplies should be equal to the supplies used during the year. Therefore, the Expenditures account should be $400,000. However, since the City still has $200,000 worth of supplies on hand at the end of the year, there should also be a Supplies Inventory account with a balance of $200,000. Choice C is the only option that reflects this.

Shoshone County Uses the Consumption Method to Account for Supplies