Goods in transit should be included in the inventory of the buyer when the terms of sale are FOB shipping point. This is because under FOB shipping point terms, ownership of the goods transfers to the buyer as soon as the seller ships the goods. At that moment, the buyer bears the risk of loss and is considered the owner, hence the goods should be recorded as part of their inventory.
In contrast, if the terms of sale are FOB destination, ownership does not transfer until the goods reach the buyer’s location. Therefore, in that case, the goods in transit would not be included in the buyer’s inventory until they arrive.
Overall, it’s important for businesses to understand these terms to accurately manage their inventory and financial records.