Define FOB terms and discuss the various areas they cover
Free-on-board (FOB) terms of sale specify when the ownership and title of the goods pass from a seller to a buyer in a domestic transaction. Wise selection of FOB terms determines control over mode and carrier selection, transportation rate negotiation, and other key decisions. Another important aspect of terms of sale is the determination of in-transit freight accountability.
FOB terms determine where the buyer's responsibilities begin and where the seller's responsibilities end. If the terms are FOB origin, title (ownership) to the goods changes hands at the origin—usually the shipping point or seller's distribution center loading dock. From that point on, the goods belong to the buyer, and any loss or damage is the responsibility of the buyer. If the terms are FOB destination, the title transfers at the destination—typically the buyer's unloading dock. The seller has total responsibility for the goods until they are delivered to the buyer.
A related issue is the responsibility for carrier payment. In general the seller pays the carrier for the transportation service cost under FOB destination terms, while the buyer pays the carrier under FOB origin terms. However, exceptions to these guidelines do occur. The option for Freight Prepaid or Freight Collect should be specified with the FOB terms. In cases where the seller has more clout with carriers, it is wise to have the seller negotiate transportation rates under the Freight Prepaid option. Freight Collect is typically used when the buyer has more power with carriers.
You might also like to view...
Which of the following statements regarding income from continuing operations is incorrect?
A) Income from continuing operations represents the part of the business that should continue from period to period. B) Income from continuing operations helps investors make predictions about future earnings. C) Income tax expense is subtracted to arrive at income from continuing operations. D) A gain on sale of equipment is outside the business's core business and is not part of other income.
Generally, remedies under "lemon laws" include:
A. offering extra credit benefits for the purchase of a new product from the same manufacturer. B. return of the purchase price or a new product. C. provision of warranty regarding repairing of defects. D. suing for injunctive relief or the seizure of products to enforce various provisions of the law.
A partnership agreement should include the method of distributing income and loss
Indicate whether the statement is true or false
High-performing salespeople tend to be strategic problem solvers for their customers.
Answer the following statement true (T) or false (F)