What is the primary purpose of recognizing the supplies remaining at year-end under the consumption method?

Recognizing the supplies remaining at year-end under the consumption method primarily serves the purpose of ensuring that the nonspendable classification of fund balances is adjusted as needed. When supplies are accounted for under the consumption method, they are recognized as an asset until they are actually used. This impacts the fund balance classification, as such supplies are labeled as nonspendable because they cannot be converted into cash or used for immediate spending.

By adjusting for these supplies, entities can provide a more accurate representation of their financial position, reflecting the resources that are not available for spending in the current period. This is essential for stakeholders to understand the true liquidity of the entity and ensure compliance with accounting standards regarding fund balance classifications.