Goods in transit are included in a purchaser's inventory:
A) At any time during transit.
B) When the purchaser is responsible for paying freight charges.
C) When the supplier is responsible for freight charges.
D) After the half-way point between the buyer and seller.
E) If the goods are shipped FOB destination.

Question

Quizplus · Accepted Answer

Goods in transit are included in a purchaser's inventory when the purchaser is responsible for paying freight charges. This is because ownership of the goods passes from seller to buyer at this point, and the buyer has the risks and rewards of ownership. If the supplier is responsible for freight charges, the goods are not yet owned by the purchaser and therefore are not included in their inventory. FOB destination means that the supplier is responsible for freight charges but the goods are owned by the purchaser once they reach their destination.

Goods in Transit Are Included in a Purchaser's Inventory