How will Freight Out be classified on an Income Statement?

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BlackTom AI · Accepted Answer

Question restatement: How will Freight Out be classified on an Income Statement?

Observation about the provided data: The answer field shows "c. Other Expenses" but there are no answer options listed in answer_options. Because the options are missing, we cannot evaluate each choice against the prompt as written. I will nonetheless describe the typical treatment of Freight Out on an income statement and why it is generally categorized in a specific way, which can help when options are present.

General concept: Freight Out (also called freight‑out or delivery expense) represents the costs incurred to deliver goods to customers after the sale has occurred. It is part of the selling expenses related to distributing the company’s products to customers.

Reason it is not typically 'Other Expenses':
- Freight Out is directly connected to the core business operations (sales and distribution), so it is usually classified within operating expenses rather than as an other or non-operating expense.
- 'Other Expenses' is a category often reserved for non-operating, miscellaneous, or unusual items that do not arise from the normal course of business operations. Freight Out arises from standard selling activities, not unusual or incidental items.

Where Freight Out is commonly placed:
- On many income statements prepared under accrual accounting, Freight Out appears under Selling, General & Administrative Expenses (SG&A) as a selling expense, sometimes specifically labeled as Delivery Expense or Freight-Out.
- In some cost-of-sales frameworks, if a company presents a detailed breakdown of operating costs, Freight Out could be listed under selling costs rather than cost of goods sold (COGS).

Potential pitfalls or misconceptions:
- Confusing Freight In with Freight Out: Freight In is included in COGS as a cost to purchase inventory, while Freight Out is a distribution expense after sale.
- Grouping all delivery or shipping costs under 'Other Expenses' would obscure the operational nature of the cost and reduce clarity for users of the financial statements.

In summary (conceptual guidance): Freight Out is typically classified as a selling expense within operating expenses on the Income Statement, not as a miscellaneous or non-operating 'Other Expenses.' When options are provided, look for choices like 'Selling expenses' or a similar line item within operating expenses rather than an 'Other Expenses' category.

If you can share the actual answer options, I can map Freight Out to the most appropriate option and explain each choice in detail.

MUF0021 Accounting Unit 1 - Semester 1, 2025 Quiz: Unit 1 Revision

How will Freight Out be classified on an Income Statement?

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