When an Acquisition Is on an FOB Origin Basis, the Inventory

question 55

Multiple Choice

When an acquisition is on an FOB origin basis, the inventory and related accounts payable must be recorded in the current period if the goods were

• A) received prior to the balance sheet date.
• B) shipped on or before the balance sheet date.
• C) both shipped and received prior to the balance sheet date.
• D) paid for in advance.

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Definitions:

Participate

To take part or become involved in a particular activity, event, or situation.

Partnership Business

A business owned and operated by two or more individuals who share its profits and liabilities.

Duty Of Care

The duty of all persons, as established by tort law, to exercise a reasonable amount of care in their dealings with others. Failure to exercise due care, which is normally determined by the “reasonable person standard,” constitutes the tort of negligence.

Jointly And Severally

A legal term referring to a situation where two or more parties are held both together and individually responsible for an obligation.