Bay City Uses the Purchases Method to Account for Supplies

question 54

Multiple Choice

Bay City uses the purchases method to account for supplies. At the beginning of the year the city had no supplies on hand. During the year the city purchased $600,000 of supplies for use by activities accounted for in the general fund. The city used $400,000 of those supplies during the year. Assuming that the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements, at fiscal year-end the appropriate account balances related to supplies expenditures and supplies inventory would be

• A) Expenditures $600,000; Supplies inventory $200,000.
• B) Expenditures $600,000; Supplies inventory $0.
• C) Expenditures $400,000; Supplies inventory $200,000.
• D) Expenditures $400,000; Supplies inventory $0.

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Definitions:

Latin

A classical language belonging to the Italic branch of the Indo-European languages, originally spoken in Latium and Ancient Rome.

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A type of unemployment that occurs when individuals voluntarily leave one job to seek another, representing a natural part of the labor market.