Question

Carriage outwards appears in ______, whereas carriage inwards appears in ________.

• A. Trading A/c, Profit and Loss A/c
• B. Profit and Loss A/c, Trading A/c
• C. Trading A/c, Balance Sheet
• D. Balance Sheet, Profit and Loss A/c

Answer 1

The correct option is B Profit and Loss A/c, Trading A/c

Carriage outward is the seller's cost of delivering goods to the buyer. It is related to sale and carriage inward is the transportation cost associated with purchase of goods. Trading account includes all the expenses related to production. All the indirect expenses comes in profit and loss account. That's why carriage outward appears in profit and loss account and carriage inward appears in trading account.