Question

Which statement and where on the statement is freight-out recorded? Why is it recorded there?

a) Operating Expenses; Represents the cost of shipping goods to customers
b) Cost of Goods Sold; Represents the cost of shipping goods to customers
c) Sales Discounts; Represents the cost of shipping goods to customers
d) Sales Returns and Allowances; Represents the cost of shipping goods to customers

Answer 1

Freight-out is recorded as an operating expense on a company's income statement because it represents the cost to ship goods to customers as part of business operations.

Step-by-step explanation:

The correct answer to the question "Which statement and where on the statement is freight-out recorded? Why is it recorded there?" is (a) Operating Expenses; Represents the cost of shipping goods to customers. Freight-out costs are recorded as operating expenses because they represent the cost associated with delivering goods to customers after the sale has been made, which is a part of the company's normal business operations. These expenses are separate from the direct costs of producing goods, which are reflected in Cost of Goods Sold.