BUSI 1101 Lecture Notes - Lecture 8: Perpetual Inventory, Income Statement, Gross Profit
18 Mar 2018
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Gst and hst paid does not form part of cost of goods (refunded) Generally no pst on goods purchased for resale. Fob (free on board: where title or ownership of goods transfers, fob destination, buyer"s place of business, fob shipping point, seller"s place of business. Freight paid by buyer (fob shipping point) is part of the cost of merchandise purchased. Ownership of the goods does not pass from the seller to the buyer until the goods are received by the buyer i. e. , destination point. Ownership of the goods passes from the seller to the buyer as soon as the goods are shipped. A purchaser returns the goods to the seller and receives a cash refund or credit. The buyer may choose to keep the merchandise if the seller is willing to give an allowance (deduction) from the purchase price. In both cases, the result is a decrease to the cost of goods purchased.
