Response to the following questions:
1. What is the general rule used to determine if a company includes an item in inventory? Apply the concept to the accounting for goods in transit and goods on consignment.
2. Which of the following items does a manufacturing company include in its inventory account? (a) Goods in transit purchased FOB shipping point, invoice received, (b) Raw materials, (c) Goods out on consignment, (d) Goods in transit sold to Breyer, Inc., shipped FOB destination, (e) Manufacturing supplies.
If possible, please give examples to better understand your response.