When goods are shipped FOB destination:

A. revenue is recognized only after cash payment is received.
B. revenue is recognized when the goods leave the shipping dock.
C. revenue is recognized when the goods are received by the customer.
D. revenue is recognized when the invoice is mailed to the customer.

The correct answer is C. revenue is recognized when the goods are received by the customer.

Explanation:

In this type of sales, where the sale is agreed at the destination port, the effective sale is registered when all the internal and external processes of export, nationalization and transportation of the merchandise have been overcome. Even before this, you should not recognize the income, since any situation can alter nature and cause a non-existent sale.

C) revenue is recognized when the goods are received by the customer.

Explanation:

When goods are shipped FOB destination it means that the title of the goods passes only after they have been delivered to the buyer's warehouse or shipping dock.  While  FOB shipping point means that the title of the goods passes immediately after they have exited the seller's warehouse or shipping dock.

In accrual accounting, both revenues and expenses must be recognized during the period that they have actually occurred, not when the revenues are collected or the expenses paid. In order for revenue to be recognized in this transaction, the title of the goods must pass to the buyer, so that means they have to be delivered and received.

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