Freight-in (carriage inwards)
In one sentenceThe cost of transporting purchased goods from the supplier to the business's warehouses; it is added to the cost of the goods themselves, not to general expenses.
Simply put
Goods are not ready for sale until they reach your warehouse. So the cost of shipping them to you is part of the item's cost, raising the unit cost and affecting its profit margin.
If you record it as a general expense, item costs will look lower than they really are, and you may price below what you should.
Worked example
A supplies store bought 500 cartons at 40 SAR per carton and paid 1,000 SAR to ship them to its warehouse.
Value of the goods: 500 × 4020,000 SAR
Freight charges1,000 SAR
Total cost: 20,000 + 1,00021,000 SAR
Cost per carton: 21,000 ÷ 50042 SAR
Don't confuse it with
Selling and distribution expensesShipping to the customer is a selling and distribution expense and is not part of the item's cost.
in FullScreen ERP
The system allocates import costs such as freight and customs to items. Purchasing and suppliers