What is carriage inward and carriage outward?

What is the meaning and posting procedure in the Trading account aspect of Profit and Loss account

2 Answer(s)


Carriage Inwards – Is the cost of transport of goods into the firm.
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.
From the buyer’s point of view, the delivery charge would he referred to as the “carriage inwards”. Any such carriage charges should be debited to the carriage inwards a/c in the general ledger.

Carriage Outwards – Is the cost of transport of goods out of the firm to its customers
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.
When the buyer sells the goods to his customer, he does further delivery charges. This cost is referred to as the ‘carriage outwards”. This costs are debited to the carriage outwards a/c in the general ledger.

Journal Entry for Carriage Inwards:
Debit : Carriage Inwards
Credit : Bank

Journal Entry for Carriage Outwards:
Debit : Carriage Outwards
Credit : Bank

Treatment in Trading, Profit and Loss Accounts:
Carriage inwards : Trading account expense
Carriage outwards : Profit & loss account expense