ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Accounting Jargon Defined: FOB Shipping Point vs. FOB Destination

Updated on July 9, 2012


Accounting jargon are special terms used by accountants and bookkeepers. The primary goal is to shorten longer words or phrases into abbreviations or shortened terms. A secondary purpose, unfortunately, is the utter confusion of non-accountants because of the jargon. Accountants frequently use abbreviations so they have adequate space to precisely describe journal entries. One abbreviation is FOB, which works as a designation for freight and shipping. Accurately recording freight transaction is crucial due to the fact that businesses might either capitalize the freight as an asset or as an expense for period cost purposes.

FOB means freight on board. There are two secondary labels that generally follow the FOB abbreviation. One label is shipping point and also the some other is shipping destination. Customers liable for FOB must record this transaction as transportation-in; vendors accountable for FOB have a transportation-out transaction.

Accounting Jargon Defined

FOB Shipping Point
FOB shipping point means that a business event took place at the vendor's site. The buyer pays all freight expenses associated with the acquired items. Freight commonly refers to semi-trucks that transfer substantial distributions of goods from the vendor's place to the purchaser's site.

FOB Destination
FOB destination represents a business event where a seller is responsible for all freight payments. Vendors will often pay the freight company upfront for all shipping costs at the time of the transaction. The vendor will normally not charge buyers for the freight cost in this transaction, although this is may not always be true as some vendors will seek freight cost reimbursement from a purchaser.

Concluding Thoughts

A transaction under FOB destination is not complete until the items reach the customer’s site or place of use or business. The vendor supervises all freight activities that occur throughout shipping. For instance, damages to goods delivered by means of freight are an additional fee to the vendor, in most cases.

Goods delivered as FOB shipping point – called transportation-in with some accountants or companies – belong to an asset total cost. For instance, huge equipment acquired under FOB shipping point will definitely have the equipment cost and freight charges included as part of the total asset amount on the company’s balance sheet. FOB destination – or transportation out – is a period cost and must be expensed in the same period when the organization receives the goods, per the financial accounting matching concept.


Submit a Comment

No comments yet.


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)