Nick Palazzolo unpacks the nuanced yet crucial accounting treatments for freight costs, distinguishing between "freight in" and "freight out" expenses. He meticulously explains how shipping costs associated with receiving inventory are capitalized and included as part of inventory costs, contrasting this with "freight out" expenses, which are treated as selling expenses and recorded differently. Nick uses straightforward examples to illustrate the recording process for both, ensuring clarity by emphasizing the practical implications of each treatment in real-world scenarios.