Problem
• You are an accounting student at your College and will not graduate for another year. But because of your excellent grades so far, you have been able to land a job in the purchasing department of a retailer. One of the purchasing agents in your company is negotiating for the receipt of a very large order of uninsured goods from a supplier. The purchasing agent is able to get a better deal on the goods if they are shipped FOB shipping point rather than the FOB destination. The agent doesn't know the difference between these two concepts. He also doesn't understand why choosing one over the other should make any difference to the company. As an accounting student at your college, you know well the difference between these two concepts, and you know why one would be a better choice over the other in the case of uninsured goods. Explain these two concepts and tell the purchasing agent which shipping method is preferable and why. In addition to your response.
• Explain the difference between the Perpetual and Periodic inventory systems and let us know why anyone would use Periodic inventory in this computerized age.