What determines whether or not goods should be included in inventory?

Goods should be included in inventory if they are owned by the business, are intended for sale or production, and are available for sale at the time of assessment. Additionally, items that are in transit or being held for future sale may also be included, provided that ownership has transferred to the business. The decision may also depend on the accounting method used, such as FIFO or LIFO, which can affect valuation. Ultimately, proper inventory management ensures accurate financial reporting and efficient operations.