What Is False Regarding the Two Methods for Recording Inventories

question 118

Multiple Choice

What is false regarding the two methods for recording inventories in governmental funds?

• A) The consumption method debits inventory when purchased and charges expenditures for the amount consumed.
• B) The purchases method debits expenditures when inventories are purchased and adjusts the inventory balance at year end.
• C) The amount of expenditure reported at year end will differ from method to method.
• D) The purchases method is preferable since it requires no adjustment to supplies expense when preparing the government-wide statements.

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Earnings resulting from conducting business, after subtracting all operational costs, taxes, and expenses from total revenue.

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An unspoken, informal agreement among competitors to avoid certain competitive behaviors, like price undercutting.

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