Final answer:
Goods in transit are inventory items being transported from a seller to a buyer, with ownership depending on the shipping terms. Inventories are affected by business expectations and are crucial in globalization. Management of goods in transit is key for business efficiency.
Step-by-step explanation:
Goods in transit refer to inventory items being transported from a seller to a buyer. The determination of which company includes these goods in inventory depends on the shipping terms agreed upon in the sale contract. F.O.B. (Free On Board) shipping point and F.O.B. destination are common terms that dictate this. For instance, under F.O.B. shipping point, goods are included in the buyer’s inventory as soon as they leave the seller’s premises. Conversely, under F.O.B. destination, the goods remain in the seller’s inventory until they reach the buyer's location.
Inventories is a category that pertains to goods produced by a business but not yet sold. The status of these items, whether they are sitting on shelves or in transition, can have economic implications. For example, if businesses anticipate better sales, inventory levels might be kept lower to reflect the expected higher turnover rate.
In the context of globalization, the transportation of goods via cargo ships and other modes of transport is crucial. These goods become part of the global economy’s flow, connecting markets and contributing to international trade. As such, monitoring and managing goods in transit is important for businesses seeking to maximize efficiency and minimize losses or delays.