Which of the following should not be included in the...

Name: Problem 2, Chapter 6: Accounting Tools for Business Decision Making
Uploaded: 2020-05-17T10:18:57-08:00
Duration: 7 min 54 s
Channel: Puneet Prajapati
Description: Which of the following should not be included in the physical inventory of a company? (a) Goods held on consignment from another company. (b) Goods shipped on consignment to another company. (c) Goods in transit from another company shipped FOB shipping point. (d) All of the above should be included.

Which of the following should not be included in the physical inventory of a company? (a) Goods held on consignment from another company. (b) Goods shipped on consignment to another company. (c) Goods in transit from another company shipped FOB shipping point. (d) All of the above should be included.

Which of the following should not be included in the physical inventory of a company?
(a) Goods held on consignment from another company.
(b) Goods shipped on consignment to another company.
(c) Goods in transit from another company shipped FOB shipping point.
(d) All of the above should be included.

Key Concepts

FOB Shipping Point

FOB shipping point is a shipping term indicating that the ownership of goods transfers to the buyer as soon as they are shipped. Therefore, goods in transit under FOB shipping point are considered owned by the buyer and should be included in the inventory count, even if they have not yet arrived at the buyer’s premises.

Physical Inventory

Physical inventory is the process by which a company counts and values its inventory on hand at a specific point in time. This is critical for ensuring accurate financial records and for determining the cost of goods sold, as well as managing supply and demand. Only inventory that is owned by the company should be included in this count.

Consignment Inventory

Consignment inventory refers to goods that are held by one party (the consignee) on behalf of another party (the consignor). Since these goods are not owned by the holder, they should not be counted as part of the holder's inventory unless they are the consignor. This distinction is important for accurate reporting and valuation of inventory.

Transcript

00:01 Okay, so we will understand the meaning of export, okay? followed by that we will understand the related terminology is so it refers to transaction involving transfer of goods from one.

00:57 So here we will write country not one okay because it is export.

01:03 So in export we have a country to country movement of goods from one country to another country against the payment of foreign exchange.

01:38 However we have written a technical definition here but we will understand it through the example.

01:50 Let's suppose there is mr.

01:53 A.

01:56 There is a mr.

01:57 A.

01:57 Who is residing in who is residing in country i and there is a mr.

02:09 K who is residing in country j okay now mr.

02:22 A supply some goods from one country from his own country i to another country j okay goods of let's say us dollars thousands so mr.

02:42 K will pay thousand dollars to mr a okay so this is the meaning of export however in export there is a very famous contract in which most of importers and exporter will be indulged okay so mr.

02:58 A will be exporter okay and mr k will be importer exporter is the person who export the goods okay who export the goods.

03:15 However, important is the person who purchases the goods.

03:20 So i'm drawing the arrows to make you understand that what type of transaction is going on between the parties.

03:28 Okay.

03:30 Now let's understand the meaning of contract that is we know as freight on board shipping point contract.

03:56 Okay.

03:58 So what are the main characteristics? first of all, seller does not pay shipping expenses...

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