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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