PRC-1 · Chapter 10 · Question 18 of 100
Which of the following describes the correct accounting treatment for 'Carriage Inwards'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It is added to Purchases in the calculation of Cost of Sales.
Explanation
Carriage inwards is the transportation cost incurred to bring inventory into the business. It is a direct cost of acquiring the goods and is added to Purchases when calculating the Cost of Sales.
More Preparation of Financial Statements MCQs
- Q20A business discovers an unpaid invoice for electricity amounting to Rs. 5,000 at the end of the year. How should this be recorded?
- Q21At the end of the year, a business has prepaid insurance of Rs. 12,000. Where will this appear in the financial statements?
- Q22Which of the following equations correctly defines 'Gross Profit'?
- Q23What is the primary purpose of the 'Statement of Changes in Equity'?
- Q24If an entity fails to record an adjusting entry for accrued wages at year-end, what is the effect on the financial statements?