Asked by Perla Alvarado on May 28, 2024
Verified
If a purchaser using a perpetual system agrees to freight terms of FOB shipping point then the
A) Inventory account will be increased.
B) Inventory account will not be affected.
C) seller will bear the freight cost.
D) carrier will bear the freight cost.
FOB Shipping Point
A term used in shipping agreements indicating the buyer is responsible for the goods and shipping costs as soon as they leave the seller's premises.
Perpetual System
An inventory accounting system that records inventory purchases and sales in real-time, providing a continuous record of inventory levels.
- Acquire knowledge on the inclusion of freight costs within transactions and its influence on Inventory accounts.
Verified Answer
XW
Xavier WoodyardMay 30, 2024
Final Answer :
A
Explanation :
Under FOB shipping point terms, the buyer is responsible for the freight costs, and these costs are typically added to the inventory account, increasing its value.
Learning Objectives
- Acquire knowledge on the inclusion of freight costs within transactions and its influence on Inventory accounts.
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