Hope you're all enjoying the slightly cooler weather!
I have a question regarding Carriage inwards and Carriage outwards. When doing the P & L, Carriage inwards is added to Purchases, being part of the cost of purchasing your goods and Carriage outwards is considered an expense and debited to the P & L. Am I right so far?
When I look at Sage however, there seem to be three different nominal codes for Carriage.....one in the 5xxx range which is obviously Carriage inwards, one in the 75xx range for Postage and Carriage, but another in the 4xxx range which is in the Sales category. So if I was to send an invoice to a customer and added carriage, would it go to 4xxx or 75xx ? And if it's the 75xx range, when does the 4xxx apply?
Frank Wood's Accounting says Carriage outwards is not part of the selling price of the goods and is always added as an expense in the P & L.
I think carriage in the sales range is when you have charged for it so it is part of your revenue, the actual cost going in your postage and carriage as an expense, so you sell an item and charge carriage at say £5 which goes in the 4000's as part of the sale and say it cost you £3 to post the item out then that would go in your postage and carriage in you P+L so you would have a difference of £2 between revenue and expense, they would then enter the £5 in their system as carriage in the 5000 range, I think.
Many thanks for the quick reply. Yes, I see what you're saying. So, if I were to invoice a customer and then charge say £5 for carriage and add that to the invoice it would be part of your sale, so in the 4xxx range, but if I was then to send the products via DHL say and they charged me £3 (not very likely...lol), that would be in the 75xx range as an expense? Have I got that right?
