A company using the perpetual inventory system paid cash for freight costs to purchase merchandise. Which of the following reflects the effects of this event on the financial statements?

Question

Quizplus · Accepted Answer

Option B reflects the effects of paying cash for freight costs to purchase merchandise in the perpetual inventory system. The merchandise inventory account increases by the amount of the merchandise purchased, while the cash account decreases by the amount paid for the freight costs. This transaction does not affect the company's revenues or expenses.

A Company Using the Perpetual Inventory System Paid Cash for Freight