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Physical Inventory Count, Ownership of Goods, and Consigned Goods definitions

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  • Physical Inventory Count
    Process of manually verifying inventory quantities at period end to ensure accuracy of recorded balances.
  • Perpetual System
    Inventory tracking method with continuous updates for each purchase and sale, reflecting real-time balances.
  • Periodic System
    Inventory method updating balances only at period end, requiring a physical count to determine ending inventory.
  • FOB Shipping Point
    Shipping term where ownership transfers to buyer when goods leave the seller's location, including in-transit items in buyer's inventory.
  • FOB Destination
    Shipping term where ownership transfers to buyer upon delivery, keeping in-transit goods in seller's inventory until arrival.
  • Ownership of Goods
    Legal right to include items in inventory, determined by shipping terms and consignment arrangements.
  • Goods in Transit
    Items being shipped between locations, whose inventory inclusion depends on FOB terms.
  • Consigned Goods
    Items held and sold by a party on behalf of the owner, excluded from the holder's inventory.
  • Consignor
    Party retaining ownership of goods placed with another for sale, recording inventory on their own books.
  • Consignee
    Party selling goods for another, earning commission but not including items in their inventory.
  • Commission Revenue
    Earnings received by a seller for facilitating sales of goods owned by another party.
  • Liability to Consignor
    Obligation to remit proceeds from consigned goods sales, minus commission, to the owner.
  • Inventory Balance
    Amount reported on the balance sheet representing goods owned and available for sale at period end.
  • Journal Entry
    Accounting record documenting transactions, such as cash received, revenue earned, and liabilities incurred.
  • Balance Sheet
    Financial statement listing assets, liabilities, and equity, including inventory owned at period end.