1) Inventories on the Consumption method should report as an expenditure only the supplies actually acquired. However, it should give balance sheet recognition to material amounts of inventory on hand at year-end and should establish reserves for both encumbrances and invetories on hand (e.g., for inventory, Dr. Inventory Supplies Cr. Fund Balance - non dispensable). 2) Capital Assets should be recognized as expenditures as acquired. The proceeds of noncurrent debt issued to nance them should be reported as " other nancing sources". Interest and principal on long-term debt need not be recognized as expenditures until they are due.

Which statement is correct,

-None

-Both

-First

-Second