Final answer:
Goods held on consignment remain as assets on the consignor's balance sheet under inventories, since consignors retain ownership until the goods are sold, and they are not included on the consignee's balance sheet.
Step-by-step explanation:
Goods held on consignment would be classified under the inventories section of a balance sheet if they are held by the consignee (the entity selling the goods on behalf of the consignor). However, they remain on the consignor's balance sheet as an asset because the consignor retains ownership of the goods until they are sold. The balance sheet, which lists assets and liabilities, uses a two-column T-account format, where the assets are on one side and the liabilities and equity on the other. When goods are shipped out on consignment, the consignor does not record a sale and the goods remain as an inventory asset on its balance sheet. Conversely, the consignee, who does not own the inventory, does not include the consigned goods in its inventory counts or balance sheet as an asset.