Assume that a government purchases $85,000 of inventory for the General Fund during the year. The General Fund began the year with an inventory balance of $15,000 and ended the year with a balance of $35,000. The General Fund uses the consumption method of inventory accounting and a perpetual inventory system. The General Fund should report

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Under the consumption method with a perpetual inventory system, expenditures are recognized as inventory is consumed. The beginning inventory was $15,000, and $85,000 was purchased, making the total available inventory $100,000. Ending inventory was $35,000, so $65,000 ($100,000 - $35,000) was consumed during the year, which is the amount reported as expenditures.

Assume That a Government Purchases $85,000 of Inventory for the General