When a Company Repays the Seller for Shipping Costs on an FOB

question 133

Multiple Choice

When a company repays the seller for shipping costs on an FOB shipping transaction, which of the following is true?

• A) A purchase discount can still be taken net of the prepaid shipping charges.
• B) A purchase discount can still be taken on the gross amount of the invoice.
• C) A purchase discount cannot be taken when shipping charges are prepaid.
• D) The shipping costs do not affect the invoice cost.
• E) The shipping costs are not added to the cost of the inventory.

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Definitions:

Pay Phone Industry

The business sector involved in providing public telephones that operate with the insertion of coins or by credit card payments.

Unitary Elastic

In economics, it describes a situation where a change in the price of a good or service results in a proportional change in the quantity demanded or supplied.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers at each price level.

Product

Any good, service, or idea that can be offered to a market to satisfy a want or need.