Carriage
Carriage is the cost to transport goods from supplier or to customer. There are 2 types of Carriage:
- Carriage Inwards
- Carriage Outwards
Carriage Inwards is the cost paid by the business to transport goods purchased. This cost is charged by the supplier. It is considered as part of the cost of goods sold. Carriage inwards must be included in the calculation of gross profit. Therefore, carriage inwards is added to the purchase cost in the Trading Account.
Carriage Outwards is the transportation cost incurred to deliver goods to customers. If customer opted to collect the goods directly from the business, carriage outwards cannot be charged. Carriage outwards cannot be considered in the calculation of gross profit.
