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If goods are shipped FOB destination, which of the following is true? A. Title to the goods will transfer as soon as the goods are shipped. B. FOB indicates that a price reduction has been applied to the order. C. The seller must pay the shipping. D. The seller and the buyer will each pay 50% of the cost.

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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Chapter
Section
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 10, Problem 4MC
Textbook Problem
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If goods are shipped FOB destination, which of the following is true?

A. Title to the goods will transfer as soon as the goods are shipped.

B. FOB indicates that a price reduction has been applied to the order.

C. The seller must pay the shipping.

D. The seller and the buyer will each pay 50% of the cost.

To determine

Concept introduction:

FOB destination:

FOB destination stands for Free On Board destination. It is a term for selling the merchandise, under which the delivery of goods is completed when the goods are reached at buyer’s destination. The goods in transit belong to the seller and seller bears the cost of transportation till the buyer’s destination. In case of FOB destination, the goods in transit should be included in the seller inventory.

To choose:

The true statement under FOB destination term.

Explanation of Solution

Explanation for correct answer:

Under FOB destination term, the seller is liable to the shipping. Hence the correct option is C.

Explanation for incorrect answers:

A. Under FOB destination term, the title of goods is transferred when the goods reaches to the buyer’s business place...

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Chapter 10 Solutions

Principles of Accounting Volume 1
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