At what point do most companies recognize liabilities in the acquisition and payment cycle when the goods are shipped FOB destination?
A) when the purchase order is issued
B) when the vendor acknowledges receipt of the order
C) when the goods or services are received
D) when the vendor invoice is received

Question

Quizplus · Accepted Answer

Liabilities are recognized when the goods or services are received because FOB destination means that the title of the goods passes to the buyer when they are received at the destination, indicating that the risks and rewards of ownership have also passed. Therefore, the buyer should recognize the liability when they have received the goods.

At What Point Do Most Companies Recognize Liabilities in the Acquisition