Final answer:
Items are part of a company's inventory if they are unsold goods held for future sale or purchased and awaiting payment, not goods already sold or included in cost of goods sold.
Step-by-step explanation:
Items should be reported as part of a company's inventory at year end if they are: b. Held in anticipation of an increase in market value, or c. Purchased from a creditor, available for sale, and paid for the following year. These items are considered inventory as they are goods that the business has produced or acquired but has not yet sold to consumers, and they remain in warehouses or on shelves.
Goods sold during the period should not be included in inventory as they are not on hand at year-end, and items determined to be part of cost of goods sold have already been reconciled with sales and should not be in the ending inventory count.