Question

Freight-in is recorded as part of ______, whereas freight out is often recorded as ______.

A- selling expense; cost of goods sold
B- miscellaneous expenses; selling expense
C- inventory; selling expense

Answer 1

Freight-in costs are incorporated into inventory costs, while freight-out costs are recorded as a selling expense. The correct answer is option C inventory; selling expense

Step-by-step explanation:

The question you've asked relates to how freight costs are accounted for in business financial records. Specifically, freight-in is recorded as part of inventory costs because it relates to the cost of getting the goods to the place of business and making them ready for sale. This is important for calculating the true cost of inventory.

On the other hand, freight-out is associated with delivering the sold product to the customer and is therefore often recorded as a selling expense.

So, the correct answer to your question is: Freight-in is recorded as part of inventory, whereas freight out is often recorded as selling expense. It's essential for businesses to correctly categorize these expenses to ensure accurate reporting of financial performance.