Income Statement and Statement of Financial Position.

1. Income Statement and
Statement of Financial Position

2. A large number of businesses return goods to their suppliers (Return Outwards)
and will have goods returned to them by their customers (Return inwards).
Return Inwards should be deducted from sales in the trading account.
Return outwards should be deducted from purchases in the trading account.
Return Inwards and Outwards

3. When goods are delivered by supplier or sent to customers, the cost of
transporting the goods is often an additional charge to the buyer. In accounting,
this charge is called carriage.
Carriage

4. When it is charged for delivery of goods purchased, it is called carriage inwards.
Carriage inwards is always added to the cost of purchases in the trading account.
Carriage Inwards

5. Carriage charged on goods sent out by a business to its customers is called
carriage outwards.
Carriage outwards is not part of the selling price of goods. Customers could come
and collect the goods themselves, in which case there would be no carriage
outwards expense for the seller to pay or to recharge customers.
It is always entered in the profit and loss account section of the income
statement. It is never included in the calculation of gross profit.
Carriage Outwards

8. Thank You.