Only freight-out costs associated with merchandise inventory are included in cost of goods sold.

Question

Quizplus · Accepted Answer

Both freight-in and freight-out costs can be included in cost of goods sold. Freight-out costs specifically refer to the shipping costs incurred to deliver the merchandise to customers, while freight-in costs refer to the shipping costs incurred to bring the merchandise to the company. Both can be included in the cost of goods sold depending on the accounting method used by the company.

Only Freight-Out Costs Associated with Merchandise Inventory Are Included in Cost