If the Terms of the Contract Specify FOB (Free on Board)

question 46

Multiple Choice

If the terms of the contract specify FOB (free on board) destination,:

• A) the seller has title until the goods are received at the destination
• B) the buyer is responsible for any loss during transportation
• C) the buyer assumes the responsibility and risk for the merchandise as soon it leaves the factory
• D) the seller does not expect payment for the merchandise until it reaches its destination
• E) the goods are being sold on consignment

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Definitions:

Cumulative Earnings

The total amount of net income a company has earned over its existence, after dividends and other distributions are subtracted.

Accounting Equation

A fundamental principle representing the relationship among assets, liabilities, and owner's equity (Assets = Liabilities + Owner's Equity).

Transactions

The exchange of goods, services, or funds between two or more parties in accounting, each recorded as an entry.

Inventory

The goods and materials that a business holds for the ultimate goal of resale or use in production.