Question

When the terms of sale are FOB destination, ownership of the goods remains with the seller until the goods a. reach the buyer. b. are paid for by the buyer. c. are accepted by the public carrier. d. are shipped.

Answer 1

Answer:

a. reach the buyer

Explanation:

FOB (Freight on board) destination means the legal title or ownership title of a product is held by the seller until the goods gets to the buyer. Under the terms of sale of FOB destination the seller regards such goods in transit as inventory. The sellers bears the cost of such goods in transit.  In other words, until goods get to the buyer's location the seller has not made sales. Once the goods gets to the location of the buyer it represent sales to the seller and therefore an increase in account receivables in the seller's books of account.

Thus, when the terms of sale are FOB destination, ownership of the goods remains with the seller until the goods reaches the buyer's location.