For the six computers example, which accounts are debited and credited in the Governmental Activities column?

• A. Expenditures and Vouchers Payable
• B. Cash and Equipment
• C. Expenditures and Payables
• D. Equipment and Vouchers Payable

Answer: (C)

In governmental funds, the purchase of on‑account items is recorded as an expenditure and a liability, not as an asset and cash. The Governmental Activities column reflects current financial resources, so you recognize the cost of the computers through Expenditures and you establish a liability for what’s owed through Payables (often Vouchers Payable).

So, when six computers are bought on credit, the entry is to debit Expenditures to reflect the resource use and to credit Payables to show the obligation to pay the supplier. Cash is not affected at this point because payment hasn’t occurred yet, and equipment isn’t recorded in the governmental funds statements (that recognition occurs in the government‑wide statements). Later, when payment is made, you would debit Payables and credit Cash.