I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

Carriage inwards is included in the cost of purchases. Carriage outwards is a selling expense.  

'Carriage' refers to the cost of transporting purchased goods (ie delivery costs) from the supplier to the 

premises of the business which has bought them. Someone has to pay for these delivery costs: 

sometimes the supplier pays, and sometimes the purchaser pays. When the purchaser pays, the cost to 

the purchaser is carriage inwards (into the business). When the supplier pays, the cost to the supplier is 

known as carriage outwards (out of the business). 

 

1.6 Example: carriage inwards and carriage outwards 

Gwyn Tring, trading as Clickety Clocks, imports and resells clocks. He pays for the costs of delivering the 

clocks from his supplier in Switzerland to his shop in Wales. 

He resells the clocks to other traders throughout the country, paying the costs of carriage for the 

consignments from his business premises to his customers. 

On 1 July 20X5, he had clocks in inventory valued at $17,000. During the year to 30 June 20X6 he 

purchased more clocks at a cost of $75,000. Carriage inwards amounted to $2,000. Sales for the year 

were $162,100. Other expenses of the business amounted to $56,000 excluding carriage outwards 

which cost $2,500. The value of the goods in inventory at the year end was $15,400.