How should a governmental fund account for a $100,000 supplies purchase using the purchases method?

When a governmental fund accounts for a $100,000 supplies purchase using the purchases method, the appropriate entry involves debiting expenditures and crediting cash. This method recognizes the purchase of supplies as an expenditure in the period when the supplies are acquired, rather than when they are used.

By debiting expenditures—supplies, the accounting reflects the immediate impact on the governmental fund's financial resources, recognizing that cash is being spent to acquire supplies necessary for operations. Crediting cash indicates that funds have been disbursed to pay for these supplies. This approach aligns with the focus of governmental accounting on resource utilization and budgetary compliance, ensuring that expenditures are recorded promptly once incurred.

Overall, this entry provides a clear representation of how funds are utilized within the governmental accounting framework, acknowledging the expenses related to ongoing operations and maintaining clarity regarding the use of financial resources.