Apple Final Cut Pro 5 - Manual (Page 384)

Chapter 3 Merging Clips From Dual System Video and Audio 49
I
 If you synchronized all of the original clips using Out points, the end of the resulting
merged clip corresponds to the Out point you used, and all clips line up at that point.
The beginning of this merged clip corresponds to the beginning of the clip with the
earliest timecode value.
 If you synchronized all of the original clips using timecode, the beginning of the
resulting merged clip corresponds to the beginning of the clip with the earliest
timecode value, and the end of the resulting merged clip corresponds to the end of
the clip with the latest timecode value.
Gaps appear in a particular track if one or more items in a merged clip is shorter than
all the others, but they cause no problems.
Video
Audio
Audio
Merged clip
Video
Audio
Audio
Merged clip