Knowledge Check 01 Complete each sentence by selecting the correct term using the drop-down list. Abbey Company completed the annual count of its inventory. During the count, certain items were identified as requiring special attention. Decide how each item would be handled for Abbey Company's inventory.

The items are:

Goods in transit to Customers warehouse

Goods loaded in Trucks but not shipped as at stock Count

Explanation:

Annual stock count is meant to help determine our closing stock position as well as complete our revenue recognition processes in line with the IFRS.

Where Goods are in transit to Customers warehouse; we would consider if the risk and reward have been passed to the Customer or not based on the contract agreed to

A. if the Risk and reward have been passed  from the point the stock was loaded based on Contract with customer then the stock should not be added to the stock physically counted in the warehouse; if otherwise, we should add the stock to that counted in the warehouse and deduct it from Sales as Goods in transit.

B.Because these goods are loaded but haven't been shipped, Abbey company still holds the full risks and rewards of these stock. thus, we have to add back the Quantity on truck to that in the warehouse.

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