Leonard Company paid freight costs to have goods shipped to one of its customers.What effect will the payment of these freight costs have on the company's financial statements?

Question

Quizplus · Accepted Answer

Paying for transportation-out decreases assets (cash) and stockholders' equity (retained earnings). It increases expenses (transportation-out), which decreases net income. It is reported as a cash outflow for operating activities.

Leonard Company Paid Freight Costs to Have Goods Shipped to One