• Inventory shipped "f.o.b. (free on board) shipping point" is included in the purchaser's inventory as a soon as the merchandise is shipped.

• On the other hand, inventory shipped "f.o.b. destination" is included in the purchaser's inventory only after it reaches the purchaser's destination.

Consignment is a selling arrangement whereby the consignor physically transfers goods to another company ("cosignee") to sell, while legal title and risk of ownership of those goods remain with the consignor during the consignment period.

• Goods held on consignment are included in the inventory of the consignor until sold by the consignee.

A company includes in ending inventory the cost of merchandise sold that it anticipates will be returned.