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Goods in transit are automatically included in inventory regardless of whether title has passed to the...

Goods in transit are automatically included in inventory regardless of whether title has passed to the buyer.

True or false

Business   Accounting   
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Answer #1

Answer:

The correct answer is the second option False.

Goods in Transit are NOT automatically included in the Inventory. It depends upon whether the Title has been passed on to the buyer or not.

For example,

In case, the Goods have been shipped by FOB Shipping Point terms, the ownership lies with the buyer. Thus, it will not be included in the Inventory once it is shipped.

In case, the Goods have been shipped by FOB Destination terms, the ownership lies with the seller until it reaches the buyer. So it should be included in the Inventory while the goods are in transit. Only when it reaches the buyer, the sale is recorded in the Seller's books and should be removed from the seller's inventory.

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