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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

If the seller assumes the entire cost of transportation, without any reimbursement from the buyer, the freight terms are considered ______________.

  1. a. FOB shipping point
  2. b. FOB destination
  3. c. Freight in
  4. d. Freight out
  5. e. FOB freight

To determine

Identify the option that assumes the entire cost of transportation, without any reimbursement from the buyer, the freight terms.

Explanation

FOB destination:

When the seller bears the freight charges for the delivery of merchandise from the point of origin, it is referred to as FOB (freight-on-board) destination. So, the title of ownership would be held with the buyer only at the destination point.

Justification for the incorrect answer:

Option a:

When the buyer bears the freight charges for the delivery of merchandise from the point of origin, it is referred to as FOB (freight-on-board) shipping point. So, the title of ownership is held with the buyer, from the shipping point itself. Hence, it is an incorrect answer.

Option c:

Freight in is the record made by the buyer, when the buyer pays the cost of freight. Hence, it is an incorrect answer

Option d:

Freight out is the record made by the seller, when the seller pays the cost of freight...

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