Accounting Dictionary

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Freight Out

Definition: Freight out is the transportation cost associated with the delivery of goods from a supplier to its customers.

This cost should be charged to expense as incurred and recorded within the cost of goods sold classification on the income statement. Freight out is not an operating expense, since the supplier only incurs this cost when it sells goods to a customer (rather than incurring it as part of day-to-day company operations).

If the cost of freight out is billed to customers, then you can net any receipts from customers against the freight out expense account, thereby reducing the expense. Freight billings to customers to offset the freight expense should not be recorded by the supplier as revenue.