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accounting Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "language ...
, 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 An expense is an item requiring an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense. For students or parents, tuition i ...
and is treated like other expense accounts in relation to the
accounting equation Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "langu ...
, however, under generally accepted accounting rules, if the freight is Freight expense has a normal
debit Debits and credits in double-entry bookkeeping are entries made in account ledgers to record changes in value resulting from business transactions. A debit entry in an account represents a transfer of value ''to'' that account, and a credit e ...
balance. Increases are recorded as debits while decreases are recorded as credits. In relation to other accounts, the Freight Expense account is similar to the "Cost of Sales-Freight" account, but are two totally different entities. While the Freight Expense account is increased for payments towards outgoing goods, the Cost of Sales-Freight account is increased for payments towards incoming goods. For example, suppose you have a business that imports and exports a type of product. When you deliver goods to customers and you pay for the delivery costs, you increase the Freight Expense account with a debit and the Cost of Sales-Freight is unaffected. However, when you purchase goods from a supplier and you pay for the delivery costs, you increase the Cost of Sales-Freight account and the Freight Expense account is unaffected. Expense {{accounting-stub