FOB Point of Origin, Freight prepaid and allowed: Buyer owns goods in transit, supplier pays freight expense.

• A. Buyer owns goods in transit; supplier pays freight expense
• B. Seller owns goods in transit; buyer pays freight
• C. Buyer owns goods in transit; buyer pays freight
• D. Seller owns goods in transit; supplier pays freight

Answer: (A)

FOB terms determine when ownership passes and who pays for shipping. With FOB Point of Origin, ownership and risk pass to the buyer as soon as the goods are loaded onto the carrier at the seller’s location. When freight is prepaid and allowed, the seller covers the shipping cost even though ownership has already transferred to the buyer. So the buyer holds ownership of the goods while they are in transit, and the supplier pays the freight expense. If ownership stayed with the seller in transit, that would be FOB destination; if the buyer were paying the freight, the freight terms would be different; the given combination specifically yields ownership in transit by the buyer and freight paid by the seller.