When a snowplow is purchased by a government, how should it be recorded in the governmental activities general journal?

• A. Expenditure—Public Safety
• B. Expenditure—Capital Outlay
• C. Capital asset
• D. Inventory

Answer: (C)

Long-lived tangible assets acquired for use in operations are capitalized in government-wide (governmental activities) accounting. A snowplow purchased for use is a capital asset, not a current-year expenditure or inventory. It is recorded at cost and depreciated over its useful life, reflecting the ongoing benefit it provides to the government’s operations. The typical entry would debit the capital assets account (e.g., Equipment or Capital Assets) and credit cash or accounts payable, rather than recording an expenditure or treating it as inventory. Expenditure—Capital Outlay or Expenditure categories belong to the funds level, not the government-wide activities, and inventory is inappropriate because the snowplow isn’t held for sale or consumption.