Which Goods in Transit Would Not Be Recorded in the Seller's

question 132

Multiple Choice

Which goods in transit would not be recorded in the seller's inventory at year end?

• A)Goods sold with terms F.O.B. destination point that were shipped at year end.
• B)Goods sold with terms F.O.B. shipping point that were shipped one day before year end.
• C)Goods sold F.O.B. destination point that remained on the shipping dock until one day after year end.
• D)Goods sold F.O.B. shipping point that were shipped two days after year end.

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Definitions:

Average Cost

A method of inventory valuation that determines the cost of goods sold and ending inventory based on the average cost of all similar items in inventory.

Ending Inventory

The price of stock available for transaction at the termination of an accounting interval.

FOB Destination

A shipping term indicating that the seller bears the shipping costs and remains responsible for the goods until they are received and signed for by the purchaser.

FOB Shipping Point

A shipping term indicating that the buyer assumes responsibility for the goods and the shipping costs as soon as the goods leave the seller's premises.