Difference between Carriage Inwards and Outwards

Carriage Inwards and Carriage Outwards are important terms if you are into accounting because though both are expenses still these both terms confuse many people regarding the adjustment which one has to make in the books of accounts. Given below are some of the differences between the two –

  1. Carriage inwards means those expenses which happen when the supplier buys the product from the company or manufacturer and when those goods are transported by the company to the supplier’s warehouse it will lead to expense which is called carriage inwards. While carriage outwards refer to those expenses which the supplier has to incur when he or she sells to the final customer because transportation from supplier’s warehouse to the doorstep of customer also entails expenses.
  2. Carriage inward is debited to trading account of the company while carriage outward is debited to profit and loss account of the company.
  3. While calculating cost of goods sold carriage inwards are categorized as direct expense and they are taken into account which is not case with carriage outwards as they are considered as indirect expense and excluded from calculation of cost of goods sold.
  4. Carriage inwards is a part of cost of goods sold and therefore it is an expense related to manufacturing or making good ready for sale whereas carriage outwards is categorized as selling and distribution expense.

As one can see there are many differences between the two terms and therefore before making any entry in the books of accounts one should clearly understand both the terms and then proceed to make any adjustments regarding this types of costs because any mistake can lead to wrong conclusions regarding the gross profit which in turn will affect other related components of the profit and loss account and balance sheet.

0 comments… add one

Leave a Comment

Related pages

semi finished goods examplesdifference between induced investment and autonomous investmentconglomerate structuredifference between monopoly and oligopolysalary payable journal entryexamples of accounting conventionsadvantages of process costing systemmerits of dictatorshipunqualified audit opinion definitionadvantages and disadvantages of a command economycost push inflation examplesan example of a vertical mergerbenefits of oligopolyconsumer durables examplesdifferences between socialism and capitalismdifference between a finance lease and an operating leasefees earned but unbilledunbilled revenue accountingdiscounting of billwhat is the journal entry for prepaid expensescapm assumptions explainedpros and cons of autocratic leadershipcarriage inwards and outwardstypes of factoringdifference between a finance lease and an operating leasedifference between accounts payable and bills payablejournal entry of bad debtsindirect expenses meaningcost concept accountingexample of prestige pricingadvantages of a swot analysiswhat is debit note with exampleadvantages and disadvantages of marginal costingbenefits of urbanisationhypothicationdefine direct expensehire purchase accounting questions and answersadvantages and disadvantages of stock market investingexamples of vertical mergermateriality principle accountingadvantages of decentralized organizationhypothecationswhat is mixed economy advantages and disadvantagesadvantage and disadvantage of mixed economyformula of operating leverageadvantages of payback methodadvantages and disadvantages of bank overdraftmarket skimming pricing strategyfluctuating capital accountfactors influencing elasticity of demanddisadvantages of marketing segmentationintraday tradesindirect quote currencyfx direct quoteadvantages and disadvantages of capitalist economydematerialisation of shares pptadvantages of barter tradedisadvantages of delegationsingle seller monopolyfull form of bhel companydefine a traditional economydebt factoring exampleprice skimming examples companyassest meaningdurable goods and nondurable goodsexplicit vs implicit costswhat is drawer and draweeagro based industry definitionadvantages of a centrally planned economydefinition of conglomerate in economicsdisadvantages of organizational structureprepaid accounting entryasset revaluation journal entriessupplementary goods economics