Accounting Dictionary

FOB Destination

FOB destination means free on board destination. It means that goods you have ordered do not legally belong to you until they are physically on your property.

Let’s say you ordered a machine that was shipped to you by rail. The train had an accident and the machine was destroyed. If it was shipped FOB destination, you would contact the supplier to send you a new machine. The supplier would work with the railroad to get compensated for their loss. What happened on the railroad was not your problem because the machine didn’t belong to you while it was in transit.

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