The Town of Pasco Has No Supplies Inventory in Its

question 11

Multiple Choice

The Town of Pasco has no supplies inventory in its general fund on January 1,2008.During 2008,Pasco incurred expenditures of $200,000 for the acquisition of supplies.On December 31,2008,Pasco's inventory of supplies amounted to $30,000.Assume Pasco uses the purchase method of accounting for supplies in its general fund and that the village reports on the calendar year.On December 31,2008,the general fund of Pasco should credit:

• A)Expenditures for $170,000.
• B)Fund Balance-Unreserved for $170,000.
• C)Fund Balance-Reserved for Inventories for $30,000.
• D)Expenditures for $30,000.

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Definitions:

Rising prices

An economic phenomenon where the general level of prices for goods and services increases over a period.

Income taxes

Taxes levied by governments on individuals or entities' income.

FIFO

Stands for First In, First Out, an inventory valuation method where goods purchased or produced first are sold or used first.

Gross profit

The difference between revenue and the cost of goods sold (COGS), representing the profit made before deducting operating expenses.