Glossary
Carriage outwards
The cost of delivering goods to customers.
What it means
The delivery cost of sending goods out to customers; an expense of the business.
Example
Paying RM90 to deliver goods to a customer is carriage outwards.
Why it matters
It is an operating expense, not part of cost of sales.
In practice
Carriage outwards is a selling and distribution cost. It is listed among the ordinary expenses in the lower part of the income statement, below gross profit. It is deducted along with wages, rent and similar items to arrive at profit for the year. It does not touch the trading section, because it plays no part in bringing goods into the business. In the ledger it holds a debit balance.
For example, a business pays RM150 to deliver goods to a customer. The RM150 is charged in full as an expense of the current period. It reduces profit for the year but leaves gross profit untouched.
Students often confuse carriage outwards with carriage inwards. Carriage outwards covers goods leaving for customers and sits among expenses. Carriage inwards covers goods arriving from suppliers and sits within cost of sales. A practical check is to ask whether the delivery helped the business acquire stock or dispatch a sale. Putting carriage outwards in cost of sales would wrongly cut gross profit.
If gross profit comes out wrong in your answers, one of our teachers can trace the cause with you in your own working. Book a trial class.
Related terms
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
Need carriage outwards explained properly?
Tell us your child’s year and board on WhatsApp and we will suggest a first lesson. One-to-one and online, from RM75/hr.
One-hour paid trial · Same-day reply