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

question 4

Multiple Choice

When a company repays the seller for shipping costs on an FOB shipping point 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 value.

---

Definitions:

Negative-sum Games

Situations in which the total losses exceed the total gains, leading to a net decrease in wealth or benefit.

Incentive

A thing that motivates or encourages someone to do something, particularly in economic contexts to influence behaviors.

Dominant Strategy

A strategy in game theory that is best for a player regardless of the strategies chosen by the other players.

Nash Equilibrium

A concept in game theory where no participant can gain by unilaterally changing their strategy if the strategies of the others remain unchanged.