What is the Difference Between Carriage Inwards and Carriage Outwards?


Difference Between Carriage Inwards and Carriage Outwards

Carriage inwards and carriage outwards are two different types of expenses incurred by a company while buying and selling goods. They may be treated alike inside a trial balance, however, there is a clear difference between carriage inwards and carriage outwards.

One is charged when the goods are being procured from the supplier, whereas, the other one is incurred while the goods are being sold to a customer. Here is a summarized table covering all major points of difference between carriage inwards and carriage outwards.

 

Carriage Inwards Carriage Outwards
1. Charges incurred for freight and transportation while purchasing goods are known as carriage inwards. 1. Charges incurred for freight and transportation by a business while selling goods is termed as carriage outwards.
2. It is shown on the debit side of a trading account. 2. It is shown on the debit side of a profit and loss account (income statement).
3. It is treated as any other direct expense. 3. It is treated as any other indirect expense.
4. It is also known as freight-inwards or transportation-inwards. 4. It is also known as freight-outwards or transportation-outwards.
5. It may or may not be capitalized depending on the asset being purchased. 5. Carriage outwards is never capitalized.
6. Mostly the buyer is responsible to pay for carriage inwards, however, not always. 6. Mostly the seller is responsible to pay for carriage outwards, however, not always.
7. You may follow the link to see Accounting and Journal entry for carriage inwards.   7. You may follow the link to see Accounting and Journal entry for carriage outwards.

 



 

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