Freight inward & outward

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Quick Summary

Freight inward is treated as a direct expense related to purchases, while freight outward is an indirect selling expense. If freight charges are recoverable from customers, they should be recorded separately as recoverable expenses rather than direct income.

Harsha

Harsha (Querist)
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30 May 2013 Dear Experts,

Freight Inward is direct expenses & freight outward is indirect expenses correct or not?

and

we paid freight inward & same thing can pass on to the customer, is it correct/is it possible?

Plz make it clear regarding freight.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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30 May 2013 Yes. Freight inward is the direct expenses since it involving in purchases and freight outward is the indirect expenses since it is selling overheads

passing the freight to customer based on negotiation with customer

Harsha

Harsha (Querist)
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31 May 2013 one of my colleague, he is shown in the books of account freight outward is direct income. how it comes sir,

which means pass on freight from purchase to sales.

whether its correct or wrong & i need about freight brief knowledge plz..

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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31 May 2013 It is not correct. when you are passing the freight outward to customer, then while incurring the expenses need to debit as Recoverable Expenses under current asset and while passing & collecting same from customer you can credit the same account

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