When an acquisition is on an FOB origin basis, the inventory and related accounts payable must be recorded in the current period if the goods were:
A) shipped prior to the balance sheet date.
B) both shipped and received prior to the balance sheet date.
C) paid for in advance.
D) received prior to the balance sheet date.

Question

Quizplus · Accepted Answer

When goods are shipped on an FOB (Free On Board) origin basis, the buyer takes ownership and responsibility for the goods once they are shipped. Therefore, if the goods were shipped prior to the balance sheet date, the inventory and related accounts payable should be recorded in the current period, regardless of when they are received or paid for.

When an Acquisition Is on an FOB Origin Basis, the Inventory