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 paying freight charges.
D) if the goods are shipped FOB destination.
Goods in Transit
Goods in transit are any items that have left the shipping dock of the seller but have not yet arrived at the receiving dock of the buyer. In this context, it indicates who has taken possession of goods, and who is paying for transportation. Accounting records for goods in transit should ideally be kept by either the seller or the buyer. In order to calculate the shipping charges, the following shipping terms must be taken into account. Those goods in transit are those which have already left the seller’s warehouse, but have not yet been received by the buyer. These goods may spend a few weeks or months at sea due to the time spent during shipping. A specific point where goods are delivered and received must be determined by both buyer and seller.
The problem of goods in transit is not a problem for local sellers since the time of delivery is short and most sellers will assume full responsibility until the buyer receives the package. On the other hand, international trade is a different story; the goods may spend weeks on the ship, so the seller needs to know who is responsible for the package. The goods belong to the seller until the buyer takes on the risk. Buyers will respond to the goods when they receive them, and they are responsible for recording the inventory as risk and reward are transferred.
As a result, the goods are deducted from the seller’s balance sheet and recorded by the buyer when risk and reward are transferred. This is the point at which risk and reward shift from seller to buyer. (ICC) has published the International Commercial Term (Incoterms) for the purposes of describing tasks, costs, and risks associated with shipping and delivering goods globally or internationally. Each point during transit will be determined by Incoterms. Shipmen will be given priority.
People Also Ask
Which of the following is not included in the merchandise inventory account?
a) damage inventory that cannot be sold.
b) invoice price minus any discounts.
d) import duties.
Damage inventory that cannot be sold are not included in the merchandise inventory account. There are a number of items that cannot be sold, and as such, they are not included in the merchandise inventory account. These items may include damaged goods that have to be repaired or replaced, or products that have been returned to the store. By excluding these items from the inventory count, it allows for better tracking of inventory levels and ensures that the right amount of product is available at all times.