Return/ Carriage (Inwards and Outwards)
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The document discusses how returns, carriage inwards, and carriage outwards are treated in a company's income statement and statement of financial position. Returns inwards are deducted from sales, while returns outwards are deducted from purchases. Carriage inwards, the cost of transporting purchased goods, is added to the cost of purchases. Carriage outwards, the cost of transporting goods sent to customers, is entered in the profit and loss account section of the income statement and excluded from the calculation of gross profit.
Return/ Carriage (Inwards and Outwards)
- 1. Income Statement and Statement of Financial Position
- 2. A large number of businesses return goods to their suppliers (Return Outwards) and will have goods returned to them by their customers (Return inwards). Return Inwards should be deducted from sales in the trading account. Return outwards should be deducted from purchases in the trading account. Return Inwards and Outwards
- 3. When goods are delivered by supplier or sent to customers, the cost of transporting the goods is often an additional charge to the buyer. In accounting, this charge is called carriage. Carriage
- 4. When it is charged for delivery of goods purchased, it is called carriage inwards. Carriage inwards is always added to the cost of purchases in the trading account. Carriage Inwards
- 5. Carriage charged on goods sent out by a business to its customers is called carriage outwards. Carriage outwards is not part of the selling price of goods. Customers could come and collect the goods themselves, in which case there would be no carriage outwards expense for the seller to pay or to recharge customers. It is always entered in the profit and loss account section of the income statement. It is never included in the calculation of gross profit. Carriage Outwards
- 8. Thank You.