A company using the perpetual inventory method paid cash for a transportation-in cost. Which of the following choices reflects the effects of this event on the financial statements?

Question

Quizplus · Accepted Answer

Transportation-in is a product cost that increases one asset (merchandise inventory) and decreases another asset (cash). It does not affect the income statement, but is reported as a cash outflow for operating activities.

A Company Using the Perpetual Inventory Method Paid Cash for a Transportation-In