Asked by sauli Lianga on May 21, 2024
Verified
Which of the following items should not be included in the cost of ending merchandise inventory?
A) purchased units in transit, shipped FOB shipping point
B) purchased units in transit, shipped FOB destination
C) units on hand in the warehouse
D) sold units in transit, not invoiced, and shipped FOB destination
FOB Shipping Point
A term used in shipping agreements indicating that the buyer is responsible for the goods and the shipping cost as soon as the goods leave the seller's premises.
FOB Destination
A shipping term indicating that the seller bears the shipping costs and retains ownership of the goods until they are delivered to the buyer's location, at which point the buyer takes responsibility.
Ending Merchandise Inventory
Ending merchandise inventory is the value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting sold goods.
- Identify items that should and should not be included in ending merchandise inventory.
Verified Answer
SW
Shauntisha WilliamsMay 27, 2024
Final Answer :
B
Explanation :
Purchased units in transit, shipped FOB destination should not be included in the cost of ending merchandise inventory since they have not yet arrived at the warehouse and ownership has not transferred to the buyer. The other options should be included in the cost of ending merchandise inventory.
Learning Objectives
- Identify items that should and should not be included in ending merchandise inventory.