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

Question

Quizplus · Accepted Answer

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

Leonard Company Paid Freight Costs to Have Goods Shipped to One