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could you please explain why Carriage In is a part of Cost of Sales. However, Discounts Received and Carriage Out, are listed in the P&L after Gross Profit and influence only the Net Profit.
I understand that we pay Carriage In when we purchase goods, so it does make sense that it is included in the Cost of Sales. The seller carries the expense of carriage outwards. So why not include it also in the Cost of Sales? Thanks!
The cost of sales is all costs of producing the goods, and only the cost of producing the goods.
Carriage inwards increases the cost of the materials and so is a cost of sales.
Carriage outwards and discounts for early payment are not a part of the production cost and so are not part of cost of sales.