Carriage relates to the cost of a supplier’s transport of products into a company, and also the cost of transporting goods to its customers from a company.
Carriage inwards is the expense of shipping and storage paid by a company that buys goods from suppliers. In the overhead expenses pool which is allocated to the goods produced in an accounting period, the most fair accounting treatment for carriage inwards would be to provide it. If this is a small sum, the expense will only be paid during the time incurred, without being included in the overhead cost pool. Therefore, it may initially appear as an asset on the balance sheet, based on the accounting treatment, and then move to the sales revenue as goods are sold in the financial statements.
Carriage outwards is the cost of shipping and handling charged to a client by a company that ships goods. The business may be able to reimburse customers for this cost; if not, the company may charge the cost of spending during the time incurred. The external cost of transportation should also occur during the same reporting period as the sales transaction in the financial statements.