Accounting for IGCSE & O level - Final Statements (Section 7 - No. 13)
How do carriage inwards charges affect the calculation of gross profit?
They increase the cost of purchases, thus reducing gross profit.
They decrease the cost of purchases, thus increasing gross profit.
They have no impact on gross profit.
They are included in the calculation of sales revenue.
Paliwanag
Carriage inwards are added to the cost of purchases, which increases the cost of goods sold, therefore reducing gross profit.