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What does the carriage inwards cost represent in the Trading Account?
- a)The cost of transporting finished goods to customers
- b)The cost of transporting raw materials to the factory
- c)The cost of transporting goods between warehouses
- d)The cost of transporting the company's employees
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
What does the carriage inwards cost represent in the Trading Account?a...
Carriage inwards refers to the cost incurred to bring the materials to the firm's location and make them available for use, essentially the cost of transporting raw materials to the place where they are needed for production or sale.
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Most Upvoted Answer
What does the carriage inwards cost represent in the Trading Account?a...
Understanding Carriage Inwards Cost
Carriage inwards refers to the transportation costs incurred to bring raw materials or goods into a business or factory. This cost is a vital component of the Trading Account and impacts the overall cost of goods sold (COGS).
Why Option B is Correct
The correct answer is option 'B' because:
Why Other Options are Incorrect
In conclusion, carriage inwards is a fundamental cost that represents the expenses related to acquiring raw materials, making option 'B' the correct choice.
Carriage inwards refers to the transportation costs incurred to bring raw materials or goods into a business or factory. This cost is a vital component of the Trading Account and impacts the overall cost of goods sold (COGS).
Why Option B is Correct
The correct answer is option 'B' because:
- Definition of Carriage Inwards: It specifically accounts for the expenses related to the transportation of raw materials from suppliers to the production facility.
- Impact on Production: These costs are essential for ensuring that the manufacturing process can occur smoothly, as raw materials are the foundation of any production activity.
- Accounting Treatment: In the Trading Account, carriage inwards is added to the cost of raw materials. This ensures that the total cost incurred to obtain these materials is accurately reflected in the financial statements.
- Influence on Profitability: Accurate reporting of carriage inwards affects gross profit calculations. Higher transportation costs can reduce profitability if not accounted for correctly.
Why Other Options are Incorrect
- Option A: The cost of transporting finished goods to customers is known as carriage outwards, not inwards.
- Option C: Transporting goods between warehouses is not considered carriage inwards as it does not relate to bringing materials into production.
- Option D: Transporting employees is unrelated to the costs associated with production and does not impact the Trading Account.
In conclusion, carriage inwards is a fundamental cost that represents the expenses related to acquiring raw materials, making option 'B' the correct choice.
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What does the carriage inwards cost represent in the Trading Account?a)The cost of transporting finished goods to customersb)The cost of transporting raw materials to the factoryc)The cost of transporting goods between warehousesd)The cost of transporting the company's employeesCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about What does the carriage inwards cost represent in the Trading Account?a)The cost of transporting finished goods to customersb)The cost of transporting raw materials to the factoryc)The cost of transporting goods between warehousesd)The cost of transporting the company's employeesCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What does the carriage inwards cost represent in the Trading Account?a)The cost of transporting finished goods to customersb)The cost of transporting raw materials to the factoryc)The cost of transporting goods between warehousesd)The cost of transporting the company's employeesCorrect answer is option 'B'. Can you explain this answer?.
What does the carriage inwards cost represent in the Trading Account?a)The cost of transporting finished goods to customersb)The cost of transporting raw materials to the factoryc)The cost of transporting goods between warehousesd)The cost of transporting the company's employeesCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about What does the carriage inwards cost represent in the Trading Account?a)The cost of transporting finished goods to customersb)The cost of transporting raw materials to the factoryc)The cost of transporting goods between warehousesd)The cost of transporting the company's employeesCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What does the carriage inwards cost represent in the Trading Account?a)The cost of transporting finished goods to customersb)The cost of transporting raw materials to the factoryc)The cost of transporting goods between warehousesd)The cost of transporting the company's employeesCorrect answer is option 'B'. Can you explain this answer?.
Solutions for What does the carriage inwards cost represent in the Trading Account?a)The cost of transporting finished goods to customersb)The cost of transporting raw materials to the factoryc)The cost of transporting goods between warehousesd)The cost of transporting the company's employeesCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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