Answer:
a)Terms FOB shipping point means the buyer accepts ownership when the goods depart the seller's place of business.
b)When the shipping costs are the responsibility of the buyer, then the Merchandise Inventory account is debited for the freight charges.
c)Revenue for the sale will be recorded after the goods reach their destination, if the goods are shipped FOB destination.
d)Terms FOB destination means that the seller is responsible for shipping costs.
Explanation:
Terms used in shipping can be regarded as INCOTERMS, and they are terms used in International Commercial activities. Some of the freight terms used are Freight collect, Freight prepaid and so on.
From the question, we were informed about The buyer and seller of merchandise agreement on who is responsible for paying freight terms. From the understanding of freight terms, we can deduce that;
✓ FOB shipping point known as Free On Board is terms used when ownership is attributed to the buyer i.e buyer stand to be responsible for anything that occur to the goods once the good/product is shipped from the seller. Inother hand, FOB destination can be explained as attributing the cost of shipping to the seller.
✓Merchandise Inventory account must be debited as far as freight charges is concerned, when the buyer is responsible for shipping cost.
✓ as far as the goods are shipped FOB destination, the revenue for the sale only get to record after confirmation of goods at the destination.
✓
