How is consignment inventory characterized?

Consignment inventory is characterized by the fact that it remains the property of the consignor, even though it is held by the consignee for the purpose of sale. The correct answer reflects the nature of the transaction where the consignee does not own the goods. Instead, the consignee has the obligation to sell these items and typically pays the consignor only after the goods have been sold. This distinctive feature ensures that risk and title remain with the consignor until a sale occurs.

The other options do not accurately represent the characteristics of consignment inventory. For example, while options regarding ownership by the consignee may imply a different ownership structure, consignment specifically delineates that the consignor retains ownership until the sale is finalized. Understanding this fundamental aspect helps in the proper accounting treatment of consignment inventory and clarifies the responsibilities of both parties involved.