Asked by Samantha Cieless on Jul 22, 2024
Verified
Which of the following should be included in the physical inventory of a company?
A) Goods held on consignment from another company.
B) Goods in transit to another company shipped FOB shipping point.
C) Goods in transit from another company shipped FOB shipping point.
D) Both b and c above.
Physical Inventory
A physical count of merchandise or commodities an organization has on hand at a specific time.
FOB Shipping Point
A term used in shipping contracts to indicate that the buyer assumes responsibility for the goods and the shipping costs from the point of departure.
- Gain insight into how goods being transported and consignment contracts affect the valuation of inventory.
Verified Answer
PB
Passanty BeshayJul 27, 2024
Final Answer :
C
Explanation :
Goods in transit from another company shipped FOB shipping point should be included in the physical inventory of a company because the ownership of the goods has already been transferred to the company and they are responsible for them. Goods held on consignment from another company and goods in transit to another company shipped FOB shipping point do not belong to the company and should not be included in their physical inventory.
Learning Objectives
- Gain insight into how goods being transported and consignment contracts affect the valuation of inventory.