Which of the Following Is Not Correct with Respect to Accounting

question 76

Multiple Choice

Which of the following is not correct with respect to accounting for supplies inventories in a governmental fund?

• A) Typically, supplies inventory is a significant portion of governmental fund balances.
• B) Supplies inventories may be recorded using either the purchase method or the consumption method.
• C) An amount equal to the ending balance of supplies is reported as Nonspendable Fund Balance.
• D) The consumption method is preferable over the purchase method since it requires no adjustment to supplies expense when preparing the government-wide statements.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired, representing the wear and tear over time.

Service Revenue

Income earned by a company for the services it provides to its clients.

Adjusting Entries

Journal entries made at the end of an accounting period to update certain accounts and report revenues and expenses in the appropriate period.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life.