A government uses the purchases method to account for both inventories and prepaid assets. Its General Fund

Question:

A government uses the purchases method to account for both inventories and prepaid assets. Its General Fund includes Inventory of Materials of $35,000 and Prepaid Insurance of $40,000. Which fund balance category should be reported on the as a result of these assets? Does your answer differ if the government uses the consumption method?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...