A General Fund Uses the Consumption Method to Record Inventories

Multiple Choice

A general fund uses the consumption method to record inventories. Beginning inventories are $10,000, purchases are $600,000, and ending inventories are $12,000. The general fund records an end-of-year adjusting entry that:

A) Debits nonspendable fund balance by $2,000
B) Credits nonspendable fund balance by $12,000
C) Debits unassigned fund balance by $2,000
D) Debits nonspendable fund balance by $12,000