Freight In and Purchases Returns and Allowances are deducted from Purchases to determine the cost of goods sold.

No, the statement is not entirely correct. Here's the correct step-by-step process:

1. Start with the beginning inventory.
2. Add the cost of purchases. This includes the cost of all items purchased for resale during the accounting period.
3. Add freight-in costs. These are the costs associated with transporting the goods to your location. They are considered part of the cost of inventory.
4. Subtract purchase returns and allowances. These are reductions in the cost of purchases due to items being returned to suppliers or allowances given by suppliers for damaged goods.
5. Subtract the ending inventory. This is the cost of all items still available for sale at the end of the accounting period.

The result is the cost of goods sold (COGS). This is the cost of all items that were sold during the accounting period. It does not include the costs of selling or administrative expenses.