Video: FOB Shipping Point vs. FOB Destination

In this lesson, Nick Palazzolo, CPA, breaks down the nuanced concepts of FOB (Free on Board) shipping point and FOB destination, essential for understanding legal responsibilities and the appropriate recording of inventory on financial statements. Nick walks through the significance of these terms in contracts for the sale of goods, as they determine when the risk of loss and title to the goods transfer from the seller to the buyer. Key distinctions are made clear, such as the point at which ownership and risk of loss are transferred under each term, who bears the responsibility for freight charges, and the implications these have during an audit or when preparing financial documentation. By offering clear examples and outlining the contrasts between shipping point and destination contracts, Nick ensures these core accounting concepts are demystified and memorable.