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

Question

Quizplus · Accepted Answer

The freight costs incurred by Lemon Company will be included in the cost of goods sold or inventory account and will be expensed in the current period. This will reduce the company's net income and equity, as well as increase its expenses and reduce its assets. It will have no effect on the company's liabilities. Therefore, the best choice is C.

Lemon Company Paid Freight Costs to Have Goods Shipped to One