Dictionary / Freight-In
What does Freight-In mean in accounting?
Quick definition
Accounts payable & receivableFreight paid on incoming shipments, treated as an element of cost of goods or materials received, or refunded by the seller or deducted on his invoice, according to custom or the terms of sale. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
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Examples
Carrier bill goes on the beans, not delivery
You run a coffee roastery. On March 4, a green-coffee supplier invoices $1,860 for a sack lot of green coffee, and a freight carrier bills you $142 to bring the pallet to the roastery. That $142 is freight-in: inbound freight on goods you received. In QuickBooks Online or Xero, enter the carrier's bill dated March 4 coded to inventory (or a freight-in account that rolls into inventory), not shipping or delivery expense. Dump it to delivery and March's P&L takes a $142 hit while the beans sit on the shelf at $1,860, so later cost of sales is short when you roast and sell them.
Invoice already deducted inbound freight
You run a hardware store. On October 7, a foundry invoices $3,450 for Dutch ovens plus $185 inbound freight, then deducts $185 on the same invoice because freight is prepaid on orders over $3,000, so net due is $3,450. Enter one bill dated October 7 to that foundry for $3,450, coded to inventory. Do not also post $185 to freight-in, and do not wait for a carrier bill you will not receive. Add the deducted freight back onto item cost and inventory is overstated by $185.
Why it matters
Freight-in is inbound freight you pay to get goods or materials in, and it belongs in the cost of those goods unless the seller refunds it or deducts it on the invoice. You will see it whenever a carrier bills you on a purchase, or a vendor invoice has a freight line you actually owe; a service shop with no incoming stock almost never posts it. Freight is the carrier charge in general, and freight absorption is outbound shipping the seller eats. Expense inbound freight as delivery and inventory is short so later cost of sales is light; add freight the seller already paid or deducted and you count the same haul twice.
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What is Freight-In in bookkeeping?
Freight paid on incoming shipments, treated as an element of cost of goods or materials received, or refunded by the seller or deducted on his invoice, according to custom or the terms of sale.
When should I use Freight-In?
Use Freight-In when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Freight-In?
Freight-In is used for freight-in entries, while F.O.B covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.