If a government uses the purchases method of accounting for inventories, the expenditures account is debited when supplies are received and the inventory of supplies account is adjusted at year-end.

Question

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This is the correct statement for the purchases method of accounting for inventories. The expenditures account is debited when supplies are received and the inventory of supplies account is adjusted at year-end to reflect the ending balance of inventory on hand.

If a Government Uses the Purchases Method of Accounting for Inventories