Core Accounting Challenges
Product in transit belongs to someone at every moment. Systems must reflect that clearly, especially across period ends.
- Manifest to receiving reconciliation
- In-transit inventory recognition at period end
- Freight, fuel and vehicle cost allocation
- Loss, damage and discrepancy documentation
Cost Allocation and 280E
Whether transport cost is inventoriable depends on where it occurs in the supply chain and the nature of the activity. Inbound movement of production inputs is treated differently from outbound distribution to a retail location, and both should be documented.
Internal Controls
Sealed transfers, driver sign-off, weight verification on receipt and prompt system entry prevent the discrepancies that are hardest to investigate after the fact.
Reporting
Cost per delivery, cost per unit moved and discrepancy rate by route provide the operational view leadership needs.
Frequently Asked Questions
- Who owns inventory during transport?
- For internal transfers, the operator retains ownership throughout, but the records should show which location holds custody at each point and reflect in-transit balances at period end.
- Is transport cost part of cost of goods sold?
- It depends on the leg of the supply chain and the activity involved. Inbound and production-related movement is treated differently from outbound distribution. Document the analysis.
- How should transport discrepancies be handled?
- Investigate immediately, document cause and quantity, correct both the tracking system and the ledger, and track discrepancy rates by route and driver.