What distinguishes Consignment inventory from Purchase inventory?

Consignment inventory is characterized by the fact that the supplier retains ownership of the inventory until it is sold. This means that while the buyer has possession of the items and can sell them, the financial liability does not transfer to the buyer until the sale occurs. This arrangement allows for lower risk for the buyer, as they are not required to pay for the inventory until it is sold. This is in contrast to purchase inventory, where ownership is transferred to the buyer upon completion of the purchase, meaning the buyer assumes the associated costs and risks immediately.

The other options do not accurately represent the distinctions between consignment and purchase inventory. For example, ownership in consignment does not transfer to the buyer right away, and purchase inventory can indeed be sourced from various suppliers—not just local ones. Additionally, while some purchase inventories may be non-returnable, this is not a defining characteristic across all purchase transactions, as return policies can vary widely.