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The company purchased row materials which was shipped by the supplier on Dec 29. It takes between 2 weeks and one month to arrive at the company's wharehouse. When can we calssify that row materials as inventory in the balance sheet?

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تم إضافة السؤال من قبل Mahmoud Hamid , Finance Manager , Experts
تاريخ النشر: 2016/02/29
Mohamed Hakeem Meerashahib
من قبل Mohamed Hakeem Meerashahib , Branch Manager , Sri Lanka State Trading (General) Corporation

The answer can be obtained by looking at the shipping terms in a sales transaction. In practice, there are two general types of shipping terms such as FOB shipping point or FOB destination

FOB stands for Free On Board

FOB shipping point – Goods will be considered as Buyers Goods  

 FOB destination - Goods will be considered as Sellers Goods  

Tamer Elbeshbishy
من قبل Tamer Elbeshbishy , Financial and Administration Manager , Muscat Towers Holding Group

As long as the company already Purchased the goods , and assuming the Balance sheet date is Decemeber 31st - And the title of goods transferred Either by FOB or CIF . Goods should be reported in the Balance sheet at the current assets section as Goods in Transit  under the General Account of Inventory  .

And immediately after the receiving and adding t the stores should be moved to the inventory main account.

 

Muhammad Kashif Tai
من قبل Muhammad Kashif Tai , Finance and Operations Manager , Ichiban CNC Solutions

yes, goods in transit it has to be classified.

Imran Khan
من قبل Imran Khan , Logistics Manager , Transmed Overseas Incorporated

It will become your inventory on date of supplier Invoice stamped by you.

 

Reda HelmyAwadNegm
من قبل Reda HelmyAwadNegm , مدير عام مالى , شركةالدلتاللأسمدة

In this case included in the letters of credit open an account if they are imported or in Tsgelaa Nkhozon account with third parties if the local DOORSTEP until the goods are checked and Giwlha permission to receive my store and evaluate what has been cashed bill

Vikas Bachhuka
من قبل Vikas Bachhuka , Sales Manager - Tire, Lubs & Batteries , ALI ALGHANIM & SONS AUTOMOTIVE CO.

Once the goods have left the country/place of production and is on the way to your place/country it will be accounted as goods in transit.

 

Only once you have physically received goods at your warehouse it can be classified as "Inventory" in books of accounts. In other words goods which are physically available with you can be classified as "inventory" in such cases.

AFSAL ANSARI
من قبل AFSAL ANSARI , Accountant

After you received the goods only recorded as inventory. Otherwise it will affect the accuracy of balancesheet.

ABDUS SAKUR TALUKDER
من قبل ABDUS SAKUR TALUKDER , Finance Manager , EMCOR Facilities Services LLC

After receiving the goods in store only. 

Wasi Rahman Sheikh
من قبل Wasi Rahman Sheikh , WAREHOUSE SUPERVISOR , AL MUTLAQ FURNITURE MFG

Agree with above answer >>>>>>>>>>>>>>>>>>>>>....

Ken Vidler
من قبل Ken Vidler , MD , RTIM ME

Items to be treated as in Transit for inventory purposes.

For the balance sheet, if paid for they are yours!

Shameer Nazir Madari
من قبل Shameer Nazir Madari , Assistant Finance Manager , METAL AND RECYCLING COMPANY K.S.C. (PUBLIC)

Purchase Raw material can be treated as inventory in the Balance Sheet only upon physically receiving the Inventory.

But the purchased material for the year end can be shown as Goods in Transit.

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