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In accounting, the concept of a freight expense or freight spend account can be generalized as a payment for sending out a product to a customer. It falls under the umbrella category of expenses and is treated like other expense accounts in relation to the accounting equation, however, under generally accepted accounting rules, if the freight is Freight expense has a normal debit balance.
In the FIFO example above, the company (Foo Co.), using LIFO accounting, would expense the cost associated with the first 75 units at $59, 125 more units at $55, and the remaining 10 units at $50. Under LIFO, the total cost of sales for November would be $11,800. The ending inventory would be calculated the following way:
A company that has a more complex shipping process may choose to go for freight invoice verification. This freight invoice verification process is a flexible solution that allows the customer to use their shipment and package measurements and calculate against the freight quotes and finally compare against the freight invoice.
For example, relating shipping and storage costs to a specific inventory item becomes difficult. These numbers often need to be estimated, diminishing the specificity advantage of the specific identification method. Thus, this method is generally limited to large, high-ticket items which can be easily identified specifically (such as tract houses).
This may require considerable recordkeeping. This method cannot be used where the goods or items are indistinguishable or fungible. Average cost. The average cost method relies on average unit cost to calculate cost of units sold and ending inventory. Several variations on the calculation may be used, including weighted average and moving average.
Goodwill impairment is a term used in accounting to recognize that the face value of an asset on paper exceeds its fair value. Based on the consultant's estimate, UPS didn't record a goodwill ...
Internal rate of return (IRR) is a method of calculating an investment's rate of return. The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk. The method may be applied either ex-post or ex-ante. Applied ex-ante, the IRR is an estimate ...
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