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What is Cartage?
Cartage refers to expenses related to freight, loading, and unloading. These expenses are related to purchase or sale of goods. In this case, goods refer to raw materials, semi-finished goods, consumable items, or already finished goods ready for trading. When cartage is paid for anything besides trading items, it is recorded under cartage expenses. For example, when paid on machinery, it is referred to as cost of machinery and not cartage expenses.
Types of Cartage Expense
Cartage expenses can be categorized into:
- Inward expenses: This is when freight, loading or unloading expenses are incurred on goods purchased.
- Outward Expenses: This is when freight, loading or unloading expenses are incurred on goods sold.
Treatment of Cartage Expenses in final Accounts
Cartage expenses will be recorded in expenses columns in trading accounts. Inward expenses will be recorded in the expenses side of the trading accounts while outward expenses are recorded in the expenses side on the profit and loss statement.