Which of the following is reported as part of the operating expenses?Group of answer choicesFreight-inFreight-outCost of salesSales allowances
Question
Which of the following is reported as part of the operating expenses?
- Freight-in
- Freight-out
- Cost of sales
- Sales allowances
Solution
The operating expenses typically include costs that are incurred in the day-to-day operations of a business. They are the costs which are directly related to the business's core operations, and they can vary depending on the nature of the business.
From the given options:
-
Freight-in: This is typically considered a part of the cost of goods sold (COGS) and not an operating expense. It is the cost of transporting goods into your business.
-
Freight-out: This is typically considered an operating expense. It is the cost of transporting goods out of your business to the customer.
-
Cost of sales: This is not an operating expense. It is the cost directly tied to the production of the goods sold by a company.
-
Sales allowances: These are typically considered as a reduction in sales, not an operating expense. They are price reductions given to customers for various reasons.
So, out of the given options, Freight-out is reported as part of the operating expenses.
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