Who bears the freight when the terms are (a) FOB shipping point, (b) FOB destination?

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pete1875 | High School Teacher | (Level 1) eNoter

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This question has to do with inventory.  More specifically when does inventory come off a sellers books and when does it go on the buyers.

(a) FOB shipping point means that the title of goods passes to the buyer at the time it is shipped.  The seller takes it off their inventory as soon as they ship it. The buyer usually pays shipping costs on FOB shipping point purchases as they consider the costs part of the purchase price.


(b) FOB destination means that the title passes to buyer when it is received.  The seller usually pays for shipping because they invoice it as transportation costs at the time of shipping.


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