Carriage Inwards and Carriage Outwards in Accounting

Carriage inwards and carriage outwards are terms used in accounting to refer to the costs associated with the transportation of goods.

What is Carriage Inwards?

Carriage inwards refers to the transportation costs incurred by a company to bring goods or materials into its premises.

For example, imagine a retail store that sells electronic hardware.

The retail store orders a shipment of 100 laptops from a manufacturer.

The manufacturer charges the store £200 for shipping the laptops to the store’s warehouse.

The £200 shipping cost is considered carriage inwards.

Carriage inwards is treated as part of the cost of goods purchased.

This means that the total cost of goods purchased includes all expenses incurred to bring the goods to their present location and condition.

For example, a company purchases raw materials worth £20,000 and incurs £500 in carriage inwards costs.

The journal entry for carriage inwards would be:

Inventory	Debit	£20,500
Cash	Credit	£20,500

Carriage outwards refers to the transportation costs incurred by a company to deliver goods to its customers.

Continuing with the same example as above, imagine that the retail store sells a laptop to a customer for £500.

The store offers free delivery to the customer, and the delivery cost is £20.

This £20 delivery cost is considered carriage outwards.

Carriage outwards is treated as a selling expense in the income statement.

For example, a company incurs costs of £200 for delivering goods to customers.

The journal entry for carriage outwards would be:

Carriage Outwards Expense	Debit	£200
Cash	Credit	£200