Rutherford County uses the consumption method to account for General Fund materials and supplies. The beginning inventory of materials and supplies was $122,000. The ending inventory was $150,000. The beginning balance of reserve for encumbrances (for supplies ordered but not received at the beginning of the year) was $50,000; the ending balance was $20,000. Supplies purchased during the year totaled $750,000. The county General Fund should report expenditures for materials and supplies for the year of

Question

Quizplus · Accepted Answer

Under the consumption method, expenditures are recognized when supplies are used. The calculation is: Beginning Inventory ($122,000) + Purchases ($750,000) - Ending Inventory ($150,000) = Expenditures ($722,000). The reserve for encumbrances does not affect the expenditure calculation.

Rutherford County Uses the Consumption Method to Account for General