Question

To record payment of freight on goods purchased (buyer pays for freight costs):

a) Credit Freight Expense, Debit Cash
b) Debit Freight Expense, Credit Accounts Payable
c) Debit Accounts Receivable, Credit Freight Income
d) Credit Cash, Debit Freight Income

Answer 1

The correct way to record payment of freight on goods purchased (buyer pays for freight costs) is to credit Freight Expense and debit Cash.

Step-by-step explanation:

The correct answer is option a) Credit Freight Expense, Debit Cash. When the buyer pays for the freight costs, the company needs to record the payment. This is done by debiting (increasing) the Cash account to show the decrease in cash and crediting (increasing) the Freight Expense account to show the increase in expense.

Credit Freight Expense:

Freight Expense is an operating expense for the buyer. By crediting this account, you are acknowledging that the company has incurred a cost associated with shipping or freight.

Debit Cash:

Since the buyer is paying for the freight costs in cash, you debit the Cash account. This reflects the outflow of cash from the company to cover the freight expenses.