What are items that are included in merchandise inventory. (Address the special situations of goods in transit consigned goods and damaged goods.)?

Merchandise inventory includes all goods available for sale, such as finished products, raw materials, and supplies. Goods in transit are included if the ownership has transferred to the buyer, typically defined by shipping terms such as FOB shipping point or FOB destination. Consigned goods remain part of the inventory of the consignor until sold, as the consignee does not own them. Damaged goods are included in inventory but may require an adjustment to reflect their reduced value if they are unsellable or have diminished quality.