Question: A government uses the purchases method to account for both inventories and prepaid assets. Its General Fund balance sheet includes Inventory of Materials of $35,000

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

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