QAEconomics › If a purchaser using a perpetual inventory system pays the transportation costs, then the
Q

If a purchaser using a perpetual inventory system pays the transportation costs, then the

a. Merchandise Inventory account is increased

b. Merchandise Inventory account is not affected

c. Freight-out account is increased

d. Delivery expense account is increased

A

Answer: a. Merchandise Inventory account is increased

This is because the cost of transportation is a part of the total inventory cost of the organization. This is, thus, added to the price of inventory charged to the consumers.

Since transportation cost is included in the direct costs, the inventory account is definitely affected.

The freight out cost is not increased because it is seen as an expense incurred when the customers get the goods.

The delivery of expenses is also affected because of the issue of transporting the products to the customers, as well as freight out.

1 year ago
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