What are FOB Shipping Terms?
A computer manufacturing company sells its products and ships them across the country. It usually takes 5 days from the time a computer is shipped to the time it is delivered to the customer. During the transportation time, is the shipped computer still sellers inventory or already buyers inventory? The reason this question is important is because it determines when the manufacturing company, the seller, can recognize sales revenue and cost of goods sold. On the other side, the answer also dictates when the buyer can record the purchased inventory. The answer can be obtained by looking at the shipping terms in a sales transaction. In practice, there are two general types of shipping terms: FOB shipping point implies terms of sale under which title of goods passes to the buyer at the point of shipment. FOB shipping point is sometimes called FOB origin. FOB destination implies terms of sale under which title of goods passes to the buyer at the point of destination. N.B. FOB stands for fr
