Amazon.com described its inventory policies in the 2019 annual report as follows:
Inventories
Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category.

We provide Fulfillment by Amazon services in connection with certain of our sellers' programs. Third-party sellers maintain ownership of their inventory, regardless of whether fulfillment is provided by us or the third-party sellers, and therefore these products are not included in our inventories.

INSTRUCTIONS:
a. Do you think that Amazon's inventory assumption is consistent with how goods move in and out of company warehouses? Explain.
b. What is Amazon's policy regarding consignment inventory? Describe the effects on the financial statements if Amazon did not follow this policy.