What is Carriage Inwards?
Carriage inwards, prominently known as freight or transportation inwards, are the costs incurred in shifting products from the supplier’s spot of business to the client’s location. Carriage inward shall be considered a direct expenditure on the income statement and will be credited to the buyer’s trading account’s debit side. It will be a part of the total cost of goods purchased, which also involves the cost of available commodities, the cost of inventory, and the cost of goods sold. In a nutshell, carriage inward is the cost of moving products from the supplier to the customer. Furthermore, the purchasing business is responsible for these shipping and handling fees. To determine the total price of acquired products, involving their inclusion in the cost of inventory, the cost of available goods, and the cost of goods sold, it is mandatory to consider them as direct expenses.
Geeky Takeaways:
- Carriage costs are the costs incurred to shift products from the supplier to the customer.
- Carriage inward is recognized as a direct expenditure on the income statement. It is credited to the buyer’s trading account’s debit side.
- The purchasing business will be responsible for shipping and handling fees.
- Carriage inward must be considered a direct expense to determine the total price of acquired products and inclusion in inventory, available goods, and cost of goods sold.
Table of Content
- Journal Entry of Carriage Inwards
- Examples of Carriage Inwards
- Accounting Impact of Carriage Inwards and Carriage Outwards
- Profitability Impact of Carriage Inwards and Carriage Outwards
- Difference Between Carriage Inwards and Carriage Outwards
- Frequently Asked Questions (FAQs)