If a government uses a perpetual inventory system for its General Fund and there is an inventory overage at the end of the year, the inventory asset account should

Question

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When there is an inventory overage in a perpetual inventory system, the inventory asset account should be increased to reflect the additional assets. Correspondingly, the expenditure account should be decreased because the overage indicates that less was spent than initially recorded.

If a Government Uses a Perpetual Inventory System for Its