When Accounting for Inventory Items in a Governmental Fund, a Reservation

question 14

True/False

When accounting for inventory items in a governmental fund, a reservation of fund balance is always required when the consumption method is used.

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Definitions:

Real Account

A permanent account in accounting that tracks the balances of assets, liabilities, and equity, and is not closed at the end of the accounting period.

Cash

Refers to money in the form of coins or banknotes, especially that possessed by a person or business for transactions.

Accounts Payable

Accounts payable is a liability account that records amounts a company owes to suppliers or creditors for goods and services received but not yet paid for.

Utilities Expense

The cost incurred from the consumption of utility services such as electricity, water, and gas in the business operations.