When companies purchase new inventory, they can't record it in their inventory account until which of...

When companies purchase new inventory, they can't record it in their inventory account until which of the following conditions have been met?

		They have begun to sell the inventory.
		They have paid for the inventory
		They have legal title to the inventory.
		They have received the inventory.

Solutions

Expert Solution

They have legal title to the inventory.

Inventory includes the items, held for sale in the normal course of business or for usage in the production. The company has to record their purchase of inventory only when the legal title is passed to them. In other words, it should not include the inventory on which legal rights were not passed to them. For example, inventory held on consignment.

ekkarill92 answered 2 years ago

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