Difference between Return Inwards and Carriage Inwards
Basis |
Return Inwards |
Carriage Inwards |
---|---|---|
Definition |
Return Inwards, also known as Sales Returns or Sales Allowances, refers to goods that customers return to the business after purchase. |
Carriage Inwards, also known as Freight Inwards or Transportation Inwards, refers to the transportation costs incurred by a business to bring goods into its premises. |
Nature |
Return Inwards represent goods that have been previously sold to customers but are subsequently returned due to various reasons such as dissatisfaction, damage, or incorrect delivery. |
Carriage Inwards relate to the costs associated with transporting goods from suppliers or vendors to the buyer’s location, such as shipping, freight, or delivery charges. |
Accounting Treatment |
In accounting, Return Inwards are typically recorded as deductions from sales revenue to reflect the net sales figure accurately. |
Carriage Inwards are typically treated as part of the cost of inventory and are added to the cost of purchased goods, increasing the overall cost of inventory. |
Purpose |
The focus of Return Inwards is on managing customer returns, maintaining customer satisfaction, and ensuring accurate financial reporting. |
The focus of Carriage Inwards is on capturing and accounting for the costs incurred in acquiring inventory and bringing it into the business’s possession. |