Questions and Answers
What does DPU stand for in shipping terms?
Which of the following is NOT included in the calculation of FAS?
What are the components of DPU as per the given equation?
How is FAS calculated?
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Which of the following is included in ORIGIN O/C?
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Which of the following reflects an expense that may be considered a miscellaneous cost?
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What type of charge does 'THC' refer to in the context provided?
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What does FRT stand for in the context of shipping calculations?
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What does FOB stand for?
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What is the formula for calculating FOB?
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Which expense is NOT included in the calculation of FOB?
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What does CFR stand for?
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How is CFR calculated from FOB?
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Which of the following is included in the Origin O/C calculations for FOB?
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Which expense would likely appear in the Destination O/C for FOB?
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Which calculation method would include costs for Customs Clearances?
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What does EX-WORKS (EXW) consist of?
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Which additional costs are included in the FCA formula?
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What elements make up the DAP formula?
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Which of the following is NOT a component of the FCA formula?
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What does DAP stand for in incoterms?
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EXW is primarily concerned with which aspect?
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Which of the following is included in the FCA charges?
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Which option best describes the relationship between FCA and EXW?
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What does DDP stand for in transportation terms?
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Which element is NOT included in the calculation of DDP?
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What does FCA stand for in shipping terms?
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Which of the following costs is NOT associated with the Origin O/C?
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In the context of DDP, what does FRT commonly refer to?
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Which component is part of miscellaneous expenses in transportation?
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What is included in the Destination O/C?
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Which of the following is a component of handling charges at the destination?
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What does DDP stand for in shipping terms?
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What is the formula for calculating CIF?
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Which component is NOT included in the DDP formula?
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What are 'Destination Total Handling Charges' categorized as in CIF?
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Which costs are covered under the CIF calculation?
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Which of the following formulas accurately describes the relationship between CFR and DDP?
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What does the acronym FOB represent in shipping calculations?
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Which of the following is NOT a component of the CFR formula?
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Study Notes
INCOTERMS 2020 Formulas
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Ex-Works (EXW)
- Formula: EXW = Cost of Goods
- Under this term, the seller's responsibility is minimal, only ensuring the goods are available for pickup.
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Free Carrier (FCA)
- Formula: FCA = EXW + Origin O/C (Loading to Truck/Inland Freight, Trucking, Haulage, and more).
- Includes costs like customs clearances and export documentation.
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Free Alongside Ship (FAS)
- Formula: FAS = EXW + Origin O/C + Freight (FRT) + Destination O/C.
- The seller delivers the goods alongside the ship, transferring risk to the buyer at that point.
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Free on Board (FOB)
- Formula: FOB = EXW + Origin O/C + FRT + Destination O/C.
- The seller covers costs and risks until the goods are loaded on the vessel at the port.
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Cost and Freight (CFR)
- Formula: CFR = FOB + FRT = EXW + Origin O/C + FRT.
- The seller pays for transportation to the destination port but the risk transfers once loaded on the ship.
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Cost, Insurance, and Freight (CIF)
- Formula: CIF = FOB + FRT + Insurance (INS) = EXW + Origin O/C + FRT + INS.
- Offers additional protection by requiring the seller to insure the goods during transport.
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Delivered at Place (DAP)
- Formula: DAP = FOB + FRT + Destination O/C.
- Seller assumes responsibility for delivering goods to a specified location, ready for unloading.
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Delivered at Place Unloaded (DPU)
- Formula: DPU = FCA + FRT + Destination O/C.
- Unique as it requires the seller to unload the goods at the destination.
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Delivered Duty Paid (DDP)
- Formula: DDP = FOB + FRT + Destination O/C.
- The seller handles all risks and costs, including import duties and taxes, until goods reach the buyer.
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Shared Elements in Terms
- Many terms share common components like EXW, Origin O/C, and Destination O/C, indicative of various responsibilities and cost distributions between sellers and buyers.
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Importance of Understanding Terms
- Correct usage of INCOTERMS helps clarify responsibilities, manage risks, and calculate costs effectively in international trade operations.
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Description
Explore the key formulas and responsibilities associated with the INCOTERMS 2020. This quiz covers terms such as Ex-Works, Free Carrier, and Cost, Insurance and Freight, detailing the seller's obligations and cost components involved in international shipping. Test your knowledge on these crucial shipping terms.
