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Question 13 Which of the following should be EXCLUDED from the inventory of a company? a....

Question 13 Which of the following should be EXCLUDED from the inventory of a company? a. All of these answer choices should be included. b. Goods in transit from another company shipped FOB Shipping Point. c. Goods shipped on consignment to another company. d. Goods held on consignment from another company.

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Answer #1

Answer: option d. Goods held on consignment from another company.

Reason: Consignor is legal owner of goods even if goods are not in custody of consigner because if goods not sold then consignee send all remaining goods to consignor. Thus, goods held on consignment from another company is excluded from inventory of company.

Goods in transit from another company shipped FOB Shipping Point is a part of Inventory because once seller shipped the goods all ownership rights transfer to purchasing party. Thus it is considered in inventory.

Goods shipped on consignment to another company is also part of Inventory because as discussed above consignor is ultimate owner of Inventory even if goods are not in hand with him or not in custody with him.

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