Question: Management adopts a policy of reporting all shipping costs (freight-in and freight-out) in an operating expense account - Shipping Expense - at the time those costs are incurred. The cost of the physical units sold are reported in the Cost of Goods Sold account at the time those units are sold. Management believes this policy better communicates its inventory decisions to financial statement users. Which of the following statements is correct? Multiple Choice Management's policy is not correct because the cost of inventory includes all costs necessary to get the inventory ready for sale. Management's policy is not correct because freight-in should be expensed only when the inventory is sold. Management's policy is not correct because the cost of freight-out represents a reduction of revenue, not an expense. Two of the other answers are correct.