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

The payment for transportation-in will decrease one asset (cash) and increase another asset (merchandise inventory). It will not affect net income, but will be reported as a cash outflow for operating activities on the statement of cash flows.

A Company Using the Perpetual Inventory System Paid Cash for Freight