Which of the following statements is correct?
A) Freight In is subtracted from Purchases to arrive at delivered cost of purchases.
B) Another name that may be used for the Freight In account is "Transportation In."
C) Freight charges that are listed on the invoice received from a supplier are not part of the total credit to Accounts Payable to record the credit purchase.
D) The Freight In account is subtracted from Sales to get Net Sales.

Question

Quizplus · Accepted Answer

Freight In and Transportation In are both names used for the account that records the cost of transporting goods purchased. Option A is incorrect because Freight In is added to Purchases to arrive at the cost of goods purchased. Option C is incorrect because freight charges included on the supplier's invoice are part of the total credit purchase and should be recorded in the Accounts Payable account. Option D is incorrect because Freight In is added to Purchases to get the cost of goods purchased, not subtracted from Sales to arrive at net sales.

Which of the Following Statements Is Correct