Question: Option #1: A Government Accounts for Inventory on the Consumption Basis

Instructions: Answer the following two questions in a 1-2 page document.

1: Why do some accountants believe that it should offset the year-end inventory balance with a fund balance-non-spendable when no comparable fund balance is required for cash, taxes receivable, or most other assets?

2: How should governments report their capital projects and debt service activities in their government-wide statements?

Requirements: Submit your responses to the following questions in a 1-2 page document in MS Word. Label each question clearly. Please include computations in a table.