Managing Inventory: Methods and Considerations

The video tutorial explores inventory management, focusing on goods in transit, consignment, and handling damaged or obsolete goods. It explains how these factors affect inventory accounts and introduces the concept of net realizable value.

What is the primary characteristic that makes inventory an asset for a company?

• It is intended for sale.

• It is always in transit.

• It is always on consignment.

• It is always damaged or obsolete.

When goods are in transit, under what condition should they be included in the buyer's inventory?

• When they are damaged.

• When the buyer has paid for them.

• When ownership has passed to the buyer.

• When the seller retains ownership.

Who is responsible for reporting consigned goods as inventory on their books?

• The consignee

• The auction site

• The buyer

• The consignor

What is the role of the consignee in a consignment arrangement?

• To own the goods

• To facilitate the sale

• To report the goods as inventory

• To purchase the goods

How should damaged goods that can be sold at a reduced price be recorded in inventory?

• Not recorded at all

• At their net realizable value

• At their original price

• As a loss