Which method of accounting for inventory is preferred for government-wide statements?

The consumption method is preferred for government-wide statements because it aligns more closely with the measurement focus and basis of accounting used in these statements.

Under the consumption method, inventory is recognized as an expense when it is consumed or used, rather than when it is purchased. This approach provides a clearer picture of the resources consumed during a reporting period, which is essential for assessing the financial position and results of operations of a governmental entity. By reflecting the actual consumption of resources, this method helps to ensure that the financial statements present an accurate view of the government's activities and financial performance.

In government-wide financial statements, the focus is on the overall financial situation and the flow of economic resources, which is why the consumption method is favored. It emphasizes the matching of expenses with the period in which they contribute to the operations of the government, thus enhancing the relevance and usefulness of the financial information to users.

Other methods, while suitable for certain contexts, do not provide the same level of insight into the effective use of resources in a governmental setting, leading to the preference for the consumption method in government-wide statements.