M Company should include the following items in its merchandise inventory:
A) Goods purchased FOB destination still en route.
B) Goods purchased FOB shipping point still en route.
C) Goods sold by M Company FOB shipping point still en route.
D) Goods held on consignment from the B Company to M Company.

Question

Quizplus · Accepted Answer

Goods purchased FOB shipping point still en route should be included in the merchandise inventory as they are already in possession of the buyer and in transit to their destination.

Answer: D
 Goods held on consignment from the B Company to M Company should also be included in the merchandise inventory as they are in M Company's possession and available for sale.

Goods purchased FOB destination still en route should not be included in the merchandise inventory until they reach their destination and are in possession of M Company. Goods sold by M Company FOB shipping point still en route should not be included in the merchandise inventory as they have already been sold and are no longer owned by M Company.

M Company Should Include the Following Items in Its Merchandise