Which of the following statements is incorrect?
A)Both freight-in and freight-out affect gross profit.
B)Freight-in appears as part of cost of goods sold under the periodic inventory system.
C)Freight-out is a shipping expense.
D)Freight-in for the purchaser occurs when the terms of the invoice are FOB shipping point.
E)When the seller bears the shipping cost,the invoice is stated as FOB destination.

Question

Quizplus · Accepted Answer

Freight-in affects the cost of goods sold by increasing the cost of inventory purchased, thus affecting gross profit indirectly. Freight-out, however, is considered a selling expense and does not affect the cost of goods sold or gross profit.

Which of the Following Statements Is Incorrect