CIF AND FOB
This query is : Resolved
16 June 2011
What is CIF and FOB? Pls provide the meanings in details alongwith its accounting treatment
16 June 2011
cif = cost of goods sold (-) insurance (-) freight
for instance,
if you export 10,000 usd & insurance
(100usd ) and freignt charges is (100 usd)
then cif will be (10000-(100)- (100)
9800 USD
Cost, insurance and freight" means that the seller delivers when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. However, in CIF the seller also has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the carriage.
"CIF Price Includes the Vehicle Price + Shipping freight + Insurance Cost".
Free on board (FOB).
This pricing term indicates that the cost of the goods, including all transportation and insurance costs from the manufacturer to the port of departure, as well as the costs of loading the vessel are readfiled in the quoted price.
This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export.
for instance,
if you export 10,000 usd & insurance
(100usd ) and freignt charges is (100 usd)
then cif will be (10000-(100)- (100)
9800 USD
Cost, insurance and freight" means that the seller delivers when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. However, in CIF the seller also has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the carriage.
"CIF Price Includes the Vehicle Price + Shipping freight + Insurance Cost".
Free on board (FOB).
This pricing term indicates that the cost of the goods, including all transportation and insurance costs from the manufacturer to the port of departure, as well as the costs of loading the vessel are readfiled in the quoted price.
This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export.
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16 June 2011
for more info:-
https://www.caclubindia.com/share_files/export-import-accounting-entries-37679.asp
https://www.caclubindia.com/share_files/export-import-accounting-entries-37679.asp
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