Under the purchases method to account for supplies inventory, an asset is recorded when inventories are acquired, and the expenditure is recorded when the supplies are consumed.

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Under the purchases method, expenditures are debited when supplies are received. Expenditures are charged for purchases made during the year and at the end of the year the supplies inventory and Nonspendable Fund Balance are adjusted to reflect actual supplies on hand.

Under the Purchases Method to Account for Supplies Inventory, an Asset