What is the main difference between the consumption and purchase methods of inventory?

The main difference between the consumption and purchase methods of inventory lies in the amount of expenditures reported.

The consumption method recognizes inventory as an asset until it is consumed, reflecting the cost of inventory used in the current period as an expense when it is actually utilized rather than when it is acquired. This method emphasizes the matching principle, where expenses are recognized in the same period as the revenues they help generate. As a result, the expenditures reported under this method only reflect those inventories consumed within the reporting period, potentially leading to lower reported expenditures compared to the purchase method in periods where inventory levels are higher than what is consumed.

Conversely, the purchase method recognizes inventory costs as expenditures at the time of purchase. This means that the entire cost of inventory purchased is reflected in the expenditures for that period, regardless of the amount consumed.

Thus, option B correctly identifies that the main difference is related to the different amounts of expenditures reported depending on when the costs of inventory are recognized as expenses.