Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

5. Inventory

Inventory Errors

Financial Accounting

5. Inventory

Inventory Errors

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Multiple Choice

Which of the following items should be included in a company's inventory at year-end?

Goods held on consignment for another company

Goods purchased FOB shipping point that are in transit to the company

Goods sold to customers but not yet delivered (FOB destination)

Office supplies on hand

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Verified step by step guidance

Understand the concept of inventory: Inventory includes goods owned by the company that are intended for sale or use in production. Items not owned by the company or not intended for sale should not be included in inventory.

Analyze 'Goods held on consignment for another company': These goods are owned by another company and are only being held by the company. Since the company does not own these goods, they should not be included in inventory.

Evaluate 'Goods purchased FOB shipping point that are in transit to the company': Under FOB (Free on Board) shipping point terms, ownership transfers to the buyer as soon as the goods are shipped. Therefore, these goods are owned by the company and should be included in inventory.

Consider 'Goods sold to customers but not yet delivered (FOB destination)': Under FOB destination terms, ownership transfers to the buyer only when the goods are delivered. Since these goods are still owned by the company, they should be included in inventory.

Review 'Office supplies on hand': Office supplies are not intended for sale or production; they are considered an expense and not part of inventory. Therefore, they should not be included in inventory.