Westcom Corporation's Goods in Transit at December 31 Include (1)

question 60

Multiple Choice

Westcom Corporation's goods in transit at December 31 include (1) sales made FOB destination, (2) sales made FOB shipping point, (3) purchases made FOB destination, and (4) purchases made FOB shipping point.Which items should be included in Westcom's inventory at December 31?

• A)(2)and (3)
• B)(1)and (4)
• C)(1)and (3)
• D)(2)and (4)

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Definitions:

Absolute Purchasing Power Parity

The theory that, in the absence of transaction costs and other barriers, identical goods in different countries should have the same price when expressed in a common currency.

Transaction Costs

The expenses incurred when buying or selling goods and services, which may include commissions, fees, and the bid-ask spread.

Covered Interest Arbitrage

An investment strategy that involves exchanging domestic currency for a foreign currency, investing in foreign interest-bearing assets, and using forward contracts to hedge exchange rate risk.

Forward Contract

A special arrangement made between two parties to transact an asset at a pre-agreed price on a set date in the future.