Inventories costs You have been assigned a new graduate as part of your audit team and they have asked you a number of questions in relation to accounting for inventories at the Lake Clifton Ltd plant.

Required Prepare a response providing an answer and reasoning to their questions, as follows.

1. Should Lake Clifton Ltd include in its inventories normal brand-name goods purchased from its suppliers but not yet received if the terms of purchase are FOB shipping point?

2. Should Lake Clifton Ltd include freight-in expenditures as an inventories cost?

3. If Lake Clifton Ltd acquires its goods on terms \(5 / 10, n / 30\), should the purchases be recorded gross or net?

4. What are products on consignment, and should they be included in the inventories balance in the statement of financial position?