BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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MERCHANDIZE SENT OUT ON CONSIGNMENT
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MERCHANDIZE SOLD IN TRANSIT FOB DESTINATION
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MERCHANDIZE PURCHASED IN TRANSIT FOB SHIPPING POINT
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MERCHANDIZE SOLD IN TRANSIT FOB SHIPPING POINT
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Detailed explanation-1: -A cost that is not included in the account of merchandise inventory is the cost of damaged inventory which cannot be provided to the customers for sales.
Detailed explanation-2: -Merchandise inventory includes all goods that have been purchased but not yet sold. This unsold inventory is categorized as a current asset on a company’s balance sheet.
Detailed explanation-3: -The correct answer is Option (d). Machinery used in the production process will not be classified as inventory.
Detailed explanation-4: -Inventory items are considered In Transit when they have been transferred from one location to another, but have not yet been received. In Transit items are not counted in the inventory valuation for either the Transfer From or Transfer To locations.