Carriage Inwards and Carriage OutwardsUnderstanding Debits or Credits with Journal Entry Examples

Written By:
Adiste Mae

Carriage is the cost that a person incurs for transporting goods or raw materials from one place to another.

It could be the cost that a supplier incurs for transporting the goods to the buyer or the cost that a company incurs for transporting a product to a customer.

Differences Between Carriage Inwards vs Carriage Outwards

Below we’ll jump into the differences between both carriage inwards and carriage outwards and some examples of how would look in a record.

• Carriage Inwards
• Carriage Outwards

Definition of Carriage Inwards

Carriage Inwards is also referred to as Freight in.

It is the cost of carriage incurred by a supplier for receiving goods or raw materials from their supplier(s) – Carriage Inwards is always borne by the supplier.

The accounting treatment for Carriage Inwards is to add it to the cost of purchasing the product.

However, if the amount is minimal, it can just be expensed when it is incurred.

The Carriage Inwards can be found as an asset in the Balance Sheet or found in the Cost of Goods Sold in the Income Statement, depending on the accounting treatment used by the company.

The journal entry to record Carriage Inwards is:

Definition of Carriage Outwards

Carriage Outwards is also known as Freight out and may be borne by the Supplier or the Buyer depending on their agreement, although ultimately, the cost is incurred by the Supplier at the time of the delivery of the goods or raw materials.

When the Seller records Carriage outwards, it is recorded as an indirect cost against selling and administrative expenses.

To record the carriage outwards, the supplier will be posting this journal entry at the time of the sale: