Assuming a periodic inventory system is used, freight charges on merchandise purchases should be debited to:Multiple Choicethe Freight In account.the Purchases account.the Accounts Payable account.the creditor's account in the subsidiary ledger.
Question
Assuming a periodic inventory system is used, freight charges on merchandise purchases should be debited to:Multiple Choicethe Freight In account.the Purchases account.the Accounts Payable account.the creditor's account in the subsidiary ledger.
Solution
The correct answer is: the Freight In account.
Here's why:
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Freight In Account: This is the account that is used to record the transportation cost associated with the delivery of merchandise from the seller to the buyer when the buyer is responsible for the freight charges. This cost is considered a part of the cost of the merchandise and is included in inventory cost.
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Purchases Account: This account is used to record the cost of merchandise purchased during a period. However, it does not include the freight charges.
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Accounts Payable Account: This account is used to record the amount owed by a company to its suppliers or vendors for goods or services received that have not yet been paid for. It does not include freight charges.
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Creditor's Account in the Subsidiary Ledger: This account is used to record individual transactions with a specific creditor in detail. It does not include freight charges.
Therefore, when a periodic inventory system is used, freight charges on merchandise purchases should be debited to the Freight In account.
Similar Questions
Under a periodic inventory system, the Merchandise Inventory account is debited when goods are purchased for resale and credited when goods are sold and delivered to customers
Under a perpetual inventory system, acquisition of merchandise for resale is debited to:Group of answer choicesthe Cost of Sales account.the Purchases account.the Supplies account.the Inventory account.
The Freight-in account:Group of answer choicesincreases the cost of inventory purchased.is contra to the Purchases account.is a permanent account.has a normal credit balance.
If a purchaser using a perpetual inventory system pays freight costs, then the: Group of answer choices Inventory account is increased. Inventory account is not affected. Freight-out account is increased. Delivery Expense account is increased.
Assuming a periodic inventory system is used, the entry to record a purchase of merchandise on credit includes:Multiple Choicea debit to Purchases and a credit to Accounts Payable.a debit to Accounts Payable and a credit to Purchases.a debit to Purchases and a credit to Accounts Receivable.a credit to Purchases and a credit to Accounts Payable.
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