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Goods a company has sold are in transit on a carrier under shipping terms of FOB destination. Should these goods be included in the seller's physical inventory count?
ANo, because the buyer already owns them
BYes, because the seller still owns them in transit
CNo, because goods in transit belong to no one
DYes, but only if they were paid for already
Answer & Solution
Correct answer: B. Yes, because the seller still owns them in transit
1. Under FOB destination the seller bears the transport cost until delivery.
2. Whoever absorbs the transport cost owns the goods in transit.
3. Therefore the seller still owns the goods and includes them in its count.
4. Rule out option A: ownership passes to the buyer only on delivery under FOB destination.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.4 "Physical Inventory Count", p.125_
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