According to the net method, which of the following items should be included in the cost of inventory? Freight costs Purchase discounts

 According to the net method, which of the following items should be included in the cost of inventory?
Freight costs
Purchase discounts


 You Answered Correctly!
The cost of inventory should include all expenditures (direct and indirect) incurred to bring an item to its existing condition and location. Freight charges are thus appropriately included in inventory costs. Under the net purchase method, purchase discounts not taken are recorded in a Purchase Discounts Lost account. When this method is used, purchase discounts lost are considered a financial (i.e., "other") expense, and are thus excluded from the cost of inventory.