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Homework answers / question archive / Goods in transit should be included in the inventory of the A) seller when the terms are FOB shipping point
Goods in transit should be included in the inventory of the
A) seller when the terms are FOB shipping point.
B) buyer when the terms are FOB destination.
C) buyer when the terms are FOB shipping point.
D) transportation company when the terms are FOB destination.
Answer: C) buyer when the terms are FOB shipping point.
Goods in transit should be included in the inventory of the buyer when the terms are FOB shipping point. Inventories are recorded in the books of the company who has the possession or risks on the items. Under the terms FOB shipping point, the buyer is responsible for the payment of transportation fees and the risks are transferred to the buyer upon shipment, which is why it should already be included as inventory of the buyer.
