Assume That the Village of Hannah Uses the Purchases Method

Multiple Choice

Assume that the Village of Hannah uses the purchases method of inventory accounting. At the end of the year, the inventory levels have increased. What entry would be made to reflect the inventory increase?

A) Debit Expenditures, Credit Inventory of Supplies.
B) Debit Inventory of Supplies, Credit Other Financing Sources.
C) Debit Expenditures, Credit Other Financing Sources.
D) Debit Inventory of Supplies, Credit Expenditures.